OK. The reason all this happening is that Bitcoin really did go to the moon. That's what powers all this speculation. If the price of Bitcoin had been stable for a decade, and it worked reliably, it would be a useful medium of exchange, but nobody would care. This is all about MAKE MONEY FAST.
Bitcoin found some early use cases. Drugs first. Then getting money out of China. Money laundering. Tax evasion. Scams. Bitcoin is the scammers dream - remote, anonymous, irreversible transactions. Much less risk of the mark coming for the scammer with a baseball bat.
Then China cracked down on cryptocurrency, shut down all the miners, and arrested a few hundred of them. Financial regulators in the more legit countries started regulating Bitcoin exchanges, so the operators couldn't just steal the money. Know Your Customer became a thing. In the US, the IRS, FinCen, the FBI, and the SEC all started paying attention to what was happening on blockchains. Cryptocurrency crime was no longer risk-free for the crooks.
But by now, sheer momentum kept Bitcoin going up. That's a powerful force. It's not forever, though. Check out meme stocks a few years later. Remember, all this stuff is zero-sum. For every winner, there has to be a loser.
That's what provides the engine behind "Web3", NFTs, DAOs, and whatnot. It's not the technology.
The thing I think driving Bitcoin is that all the other assets that can absorb billions of dollars in liquidity are throughly manipulated.
A trillion dollars goes into Sovereign Debt. The government can issue endless sovereign debt to dilute that.
A trillion dollars goes into the stock market. The companies on the stock market can issue tons and tons of new shares to dilute that.
A trillion dollars goes into paper gold. The commodities markets can naked short paper gold for however long they want to since there's cash settlement allowed of futures contracts.
A trillion dollars goes into bitcoin, the price just goes up and there's no dilution. This is what makes it a symbol of resistance against those assets and the way corporations, sovereigns and commodity market makers use their particular rules to extract wealth from their investors.
Also, Bitcoin is open source. So you can download the Bitcoin code and fork it and call it THE SUPER NEW IMPROVED BITCOIN, and set the "super new improved bitcoin" generation to a trillion bitcoin an hour, but the original bitcoin nodes are still around and doing their thing. However, there's nothing stopping people who want to do it your way from using your chain.
all the other assets that can absorb billions of dollars in liquidity are throughly manipulated
Bitcoin is thoroughly manipulated. Tether is minting a billion dollars a day now, with zero oversight and close ties to the major exchanges. Exchanges themselves have been found front running customers, running wash trades on their own coins etc etc. Fraud is rampant in this space and there is zero oversight from the normal regulatory bodies.
A trillion dollars goes into bitcoin, the price just goes up and there's no dilution.
But there is significant manipulation and absolutely no clarity about whether a trillion dollars has in fact gone into cryptocurrencies or whether things like the trillions of dollars that tether has minted affect the price more than real money flowing in. The numbers you can quote from exchanges are unaudited and highly suspect. At least those other assets have some sort of auditing in place to prevent fraud and market manipulation (which still happens, but would of course be rampant and largely hidden without regulation).
Also, Bitcoin is open source. So you can download the Bitcoin code and fork it and call it THE SUPER NEW IMPROVED BITCOIN
Ah, so the supply of this new money is in fact unlimited, since you can add new coins at any time. The supply of bitcoin may be limited (for now, by fiat), but the supply of cryptocurrencies and now nfts is constantly growing, there is no scarcity, and any we have is invented.
If you think Bitcoin is a symbol of resistance you're a mark making the likes of the Winklevoss twins and JL Van der Velde even richer. Get out now if you can.
I don't know anything about anything, but I see Wikipedia says Tether is 65% "backed by commercial paper". Which as far as I can tell basically means IOUs, but IOUs that are considered somewhat legit. It definitely seems questionable, but I'm not really sure how to assess how bad it is or isn't.
Their commercial paper would make them one of the largest players in the global market if their numbers were true, but nobody knows what they have invested in, they say it is in crypto as well (eek!), they've been found guilty of fraud multiple times, including faking assets by using temporary bank transfers, and the amounts we're talking about make it very hard to believe they could function at that scale without making lots of noise in the global commercial paper market.
So basically, like most other things they say, it's simply not credible.
Everything can be manipulated, but bitcoin compared to any other asset we know, is the only thing that cant be changed. You can create a new bitcoin but you cant create the same bitcoin and thats makes all the difference in the world.
1. The rules can (and have) been changed by whoever has commit permissions on the repo, they are not immutable.
2. The rules can also be changed with a simple fork if enough users are persuaded to move (Bitcoin Cash) - and somehow the price of both is preserved (how? why? who benefits?).
3. The price is provided by unaudited exchanges and can be manipulated by manipulating linked assets and collusion with exchanges, as Tether has shown.
1) The rules about the 21Million which is the only thing that matters here can't be changed.
2) Again there is a reason why Bitcoin Cash is a fraction of BTCs value it's not the same.
3) Everything can be manipulated. You go and see how Soros did that in the 90es. But again that's not the measurement here. It can't be changed.
It's been a house waiting to collapse for 12 years now. Maybe you should ask yourself what it would take for you to admit to yourself that you were wrong. How long does this have to be a thing?
The rules about the 21Million which is the only thing that matters here can't be changed.
What would stop it being changed?
It's been a house waiting to collapse for 12 years now.
Tether has only been trading since 2015 and only prominent the last few years. Other cryptocurrencies have seen multiple bubbles and collapses. The thing that would convince me personally is that all the get-rich-quick marks and scammers leave the space and people start using it for actually useful things like payments.
Unfortunately distributed consensus with a global public ledger is particularly badly suited to payments or a currency, though it seems well structured for a ponzi scheme.
I'm not clear on why you think this is 'impossible'. It's clearly possible to change the rules of a system defined by software, it just requires a majority of those maintaining the chain to go along with it.
The crypto exchanges can sell more bitcoin than they have. Nobody is auditing them, and unless they collapse then there is not going to be an audit of what they hold.
And with bitcoin being so impractical, there are is always going to be vast amounts of centralisation.
But publicly traded companies don't dilute their shareholders away. Those shares either have to be sold (meaning the company takes in proportional amounts of cash, driving the value up) or issued as compensation (which you can't just unilaterally in a publicly-traded company).
Your gold example is also very contrived because the futures market doesn't literally dilute away physical gold.
As for Bitcoin: You're missing the fact that while Bitcoin can't be manipulated away from 21 million, the Bitcoin markets can definitely be heavily manipulated by sufficiently large players and insiders. And there does seem to be ample evidence that this is happening.
> As for Bitcoin: You're missing the fact that while Bitcoin can't be manipulated away from 21 million, the Bitcoin markets can definitely be heavily manipulated by sufficiently large players and insiders. And there does seem to be ample evidence that this is happening.
So what will the argument be when this market is regulated? Gary Gensler is obviously a fan of Bitcoin. He considers other digital assets in a different light, and seems to consider many of them to be securities. What happens when crypto exchanges are regulated and the level of manipulation is much harder, similar to traditional financial markets? The 21 million cap on Bitcoin is going to look more attractive then, I think, at least to those who aren't considering that now. Plenty of folks already consider the 21 million cap on Bitcoin very attractive, and I think this will only increase over time.
Also the other comments that I see arguing how Bitcoin could be changed tells me that those people have not followed the history of Bitcoin very closely. It seems one of Bitcoin's main goals over the past 10 years is ossification and hardening of the system, i.e. being very strict and careful about changes. This seems built into the ethos of the system. The Bitcoin Cash fork is an example of this. Bitcoin Core refused to change the block size and that led to a fork which has not done well in terms of price in comparison to Bitcoin. One could say that so far the Bitcoin Cash fork has failed in comparison.
No, you need real money backing a credit line and collateral. Same as in any other futures business. This isn’t a new correlation, it is society driving the value of society’s creations.
> The thing I think driving Bitcoin is that all the other assets that can absorb billions of dollars in liquidity are throughly manipulated.
Bitcoin can be just as much manipulated, if not more, because there's barely any regulatory oversight. Remember the two bots that traded Bitcoins with each other on Mt Gox to drive the price up (https://www.theguardian.com/technology/2014/may/29/bitcoin-b...)? What makes you think something like this doesn't exist anymore? Especially with the Tether guys at the helm, who have been proven to lie in the past (https://ag.ny.gov/press-release/2021/attorney-general-james-...), Bitcoin and other cryptocurrency investors should be worried.
Actually the opposite thing happens in the stock market. The shareholders vote on the board of directors and the board of directors pay the CEO mostly based on the stock price going up. One way they do that is buying back shares. Another way is buy making money via positive cashflow and giving dividends to the share holders.
Bitcoin has negative cashflow, the only way it goes up is by more people putting money into it. I'm not saying that is a bad thing. Picasso paintings also have negative cashflow when you account for storage and security of the art. The only way a Picasso goes up in value is if more people with more money want to buy one. It is unfair to call Bitcoin a Ponzi scheme because no one calls a Picasso a Ponzi scheme.
this argument is frequently made to defend the shifting profits away from the edge (the supply side, and the retail side) and extract value from the middle (the tax haven¹).
Both are immoral but only one is illegal. One can do a double-Irish-Dutch sandwich and rat fuck both employees and suppliers all in the name of creating value for the shareholders. While employees piss into bottles the forward thinking CEO engages in union busting methods to prevent them from organizing. Legal or not, why not, if you can get away by stalling until a court decides and you settle (or purge the board from the toxic elements and restart what you do with a new CEO).
Not sure about Picassos. Picasso was a world famous artist that even those who are not into fine art know and appreciate. There is kind of a consensus on the value of his work, and even those who find it ugly won't treat it as trash.
The way I understand it, the kind art that is most often used in money laundry schemes is the more controversial kind. When some people think that a painting is a waste of perfectly good canvas while some rick collectors think it is the expression of god himself, how can you assign a value? This extreme subjectivity is what makes it ideal for money laundering.
I would love to know how the IRS handles this. You report 2M of income from selling your art. Does the IRS ask for details? Or do they try and find out how the person who bought your art got the money? Or they just don't care as long as you pay the income tax on it?
> Research by John M. Griffin and Amin Shams in 2018 suggests that trading associated with increases in the amount of tether and associated trading at the Bitfinex exchange account for about half of the price increase in bitcoin in late 2017.
One Tether is the supposed to be = to one USD which is supposed to be in Tether's bank account somewhere. They have like 16 people total and are based in a mailbox in the Caribbean and nobody in the commercial paper markets have heard of them, despite them being one of the largest buyers in the world (in theory). Their "audits" aren't really audits and there's a ton of sketchiness with the firm they chose last time they ran one.
In practice they basically use their trusted position within an exchange (as the 1-to-1 representation of a US dollar) and simply create new Tethers from thin air, move them to an exchange, buy BTC, pump the price, and essentially act as a stabilizer whenever the price starts tanking. For instance they've printed over $2 Billion worth of Tether since Saturday, with absolutely no evidence that real people actually put $2B into exchanges to buy crypto.
It's an amazing scam since anytime it looks like the floor is about to fall out, they print billions more and keep their position alive by pumping crypto back up.
Anyways the reason it's important is because Tether and other stablecoins are supposed to be the fiat offramp in the event that you want to withdraw money from an exchange. After all, to buy BTC you really first bought Tether (or USDC) and then traded your tether for BTC a minute later. So all of the hard cash in the exchange is supposed to be represented by Tether... guess what happens when people realize their cash isn't actually there 1-to-1 like it was promised? Massive liquidity crises and all cryptocurrency falls 90%+.
USDC and Tether are _not_ the same thing. They're collateralized and distributed differently; the only similarity they have is being stablecoins. That's like saying potatoes and carrots are the same thing because they're vegetables.
I don't think I need to explain how risky it is to buy subprime commercial paper denominated in non-US currency to back up your USD reserves. It's not like Evergrande is teetering on the verge of a massive default or anything...
A lot of crypto trade (especially on shadier exchanges without KYC or the option to use fiat) is denominated in tether.
Tether keeps printing billions of dollars with no oversight or regulation. They lied about it being backed by cash reserves, and now make a much softer claim that its backed by "some cash" and other assets (other assets include more crypto IIRC).
Basically, it feels like tether is inflating the price of BTC, and the exchanges all have a vested interested in continuing to pretend tether is worth something. If there was a run on tether (i.e. everyone tries to exchange for fiat) it could be catastrophic for all of crypto.
(Disclaimer: I am not a financial expert, and have just picked this up from reading about tether over the last few months).
Most bitcoins are bought with tethers and tethers are issued by Tether inc. Thether inc. claims that tethers are backed by real US dollars, however nobody knows whether this is true and Tether inc. has been shown to have lied about that in the past. In short, the widespread suspicion is that exchanges and other parties are using unbacked tethers to pump the price of bitcoin up.
Not just a derivative, bitcoin itself can be inflated via partially-backed bitcoin deposits at exchanges. In other words, the moment exchanges decide to lower their reserve ratio from 1 to less than 1, the supply of bitcoins in circulation will increase as a result. And, as you point out, we don't know that this hasn't already happened.
Shove some cash under a mattress or store it in a vault and you can be sure you are holding real dollars not fractional ones. Just holding a real dollar says nothing about the value of the dollar you are holding. Same as just holding a real bitcoin says nothing about the value of the bitcoin you are holding. Outside forces affect the actual value of what you hold fractional or not. The ability to self-custody affords you nothing. The value in either case can plummet completely outside of your control.
Barring value judgements about the subject, there are some large chronology and fact checking problems with this post. The federal scrutiny of Bitcoin happened a long time ago now.
The China crackdown was this year. The US agencies mentioned all started examining bitcoin in 2012 at the very latest, and had a decent grip by the next year. Left off the list is the agency with the most impactful jurisdiction- the DHS- who essentially "signed off" on the "legality" of Bitcoin in 2013, specifically citing the ease of tracing bitcoin transactions. The IRS gave its guidance on bitcoin (and classed it as property for taxation purposes) in 2014. FinCen was not particularly concerned at this time, according to someone at FinCen at the time.
Cooperation between compliance specialists (like Promontory) and major investors and the federal government (for KYC and AML) hit full steam by end 2013, by necessity. The FBI seizes assets suspected of being used in the commission of federal crimes, and bitcoin is simply another asset for them to seize, which the Justice Department has done successfully for a decade now.
One could argue that bitcoin was able to go to the moon because of these decisions, actions, and verdicts.
Sources: people who worked in these agencies or organizations at the time and the publicly available information at the time that it was disseminated.
2018 was the year the US SEC really cracked down on ICOs. First a few of the totally fraudulent ones.[1] Then, anything that looked like a security offering.[2]
The IRS has been gradually upping the pressure. Form 1040 for 2020 included, for the first time on the main form, the question "At any time during 2020, did you sell, receive, send, exchange or otherwise acquire any financial interest in any virtual currency?" The IRS has access to Know Your Customer data from many crypto exchanges, so, anyone who checks "No" and has a crypto exchange account will get attention.
Here's a history of the IRS slowly tightening its grip on cryptocurrencies.[3]
Right, I understand that can appear to be tightening, but the IRS guidance is exactly the same since 2014, as are the penalties. They're now more actively alerting US taxpayers they need to pay taxes on their "virtual currencies." But the US taxpayer has always had that obligation, and the IRS is now starting to more visibly enforce it. They've been doing so less visibly as well. With so much more digital asset economic activity, there's that much more taxation, and that much more enforcement. The code is the same.
American crypto exchanges were actually reporting predating that announcement; they had to in order to not get shut down. Thoughtful people knew that certain regulation would have to be met from the beginning, but that memo wasn't universal and there's no one who goes door to door with the facts for hungry home speculators. There's likely to be a continual wave of retroactive enforcement for some time. That's why most sincere people in the space have been paying any required taxes generated by their activity starting for the year 2015 at the latest.
Incidentally, bitcoin hasn't been considered a security by the IRS yet, but the infrastructure bill that just passed has a whole sea change of new regulation for the space. I don't feel I've been informed well enough yet to comment much regarding macro implications. But there is something in there that could effect the latest buzzwords to go media viral: NFTs. Securities-related Know Your Counterparty and Anti-Money Laundering regulations that will be in effect starting in 2023 may apply to NFT sales, for any seller. That could have a real impact. You would need the EIN or social security number of your buyer.
We could call this tightening or a crackdown, but I think it also might be fair to call it reigning things in to prevailing standards. I don't really know. All this revolves around interesting questions about how the standards continue to be established for what constitutes a digital security vs digital property/currency.
As to the ICOs crackdown, it was nice to see regulators actually take real action on straightforward and often inept securities fraud. They were enabled by capability advances that weren't as feasible with bitcoin alone. They were old grifts cycled around again for a round of digital "innovation," so they were nipped in the bud pretty quickly. These kinds of fraud will probably spring up at every stage of the digital asset technology development cycle. The noise can be a bit maddening, and I can understand your general sentiment.
Yes. It's pretty clear that forward looking NFTs are securities under US law, per the Howey test. The NFT community is in total denial about this.
The SEC is basically reactive. They wait until people complain about losing money in a scam. Then they bring the hammer down. This avoids complaints about over-regulation.
(A "forward looking NFT" is something like land in a virtual world that doesn't exist yet.
You're funding an enterprise run by others to build the thing. That's an investment contract, which the SEC regulates.
An NFT that represents "art" that exists at the moment of sale is probably just a collectable.)
By the way, none of this is new. See "Swampland in Florida" on Wikipedia for the 1950s version of the same concept.
That's true, except they have been enforcing and building the capabilities to enforce at a larger scale. They can enforce going back decades, are called in constantly to help other investigations and prosecutions, and are in no rush.
It's just like everything else, literally, and tax evasions only get media coverage under pretty limited circumstances.
Taxation in the space has always had a foregone conclusion that some have chosen to handwave or rationalize away. Not a bright strategy IMO.
Regardless of Bitcoin itself, it seems the US has started looking at Federal regulation of stablecoins only this year. The way it looks to me, the existence of wildcat stablecoins are an important pillar keeping the crypto economy afloat. Just this week Tether was seen printing billions again, just as Bitcoin started going south.
Tether has a lot of people worried. It's a big enough issue to have reached Cabinet level. Tether now has US$76 billion outstanding. This can't end well.
No, that is a necessary but insufficient condition to come up with Web3. Web3 also requires the concept put forward by Ethereum of having an instruction set one can pay to run on chain. That would have probably been thought up and deployed independently from Bitcoin's price action. But both probably were necessary to provide sufficient foundational momentum to building things like DeFi.
You're actually right, you know. Bitcoin failed at everything it set out to be. It failed to be a currency. It failed to be anonymous and untraceable. It failed to be decentralized. It failed at basically everything except making people rich. The fact it's still the number one cryptocurrency is proof that this market is irrational and couldn't care less about fundamentals. Monero is the better coin in every way yet nobody seems to know about it.
And so what if criminals are using it? It's just like cryptography: you can't choose who it protects. If anything, the fact criminals are using it strengthens its value proposition because it means it works. KYC/AML are just the financial version of global warrantless surveillance and should be opposed on principle just as strongly as we fight for our privacy on every other front. If that makes life a little harder for authorities then so be it.
People are actually scared of monero, since it actually does what bitcoin set out to do. It's a little funny. It doesn't have the same insane volatility, so it's not exciting, just "criminal". I wonder if that suggests that the volatility is coming from exchanges that don't list monero, though.
Satoshi also predicted hyperinflation in 2008 after central banks intervened to mitigate the financial crisis. He was most likely a computer scientist, definitely not an economist.
Hal Finney was not Satoshi, and there's not a single shred of evidence in that wiki article pointing towards him. Instead it's just his grieving family being traumatized by scammers.
There is nothing to explain, it is public knowledge. The transaction you mention happened after the public announcement of bitcoin on a mailing list which Hal Finney was active on, and after Satoshi reached out directly to Hal (and others).
A correct prediction of the former doesn't imply a correct prediction of the latter. For what it's worth, I think it will become stable at around zero USD.
that's how i felt about social networking. People posting their breakfast, ridiculous. Baby pictures, silly. Cat pictures, kids these days. Yet somehow the vanity/reality show is making billions 10 years later
I found the FB thread because I’m always curious how predictions on here pan out. I haven’t read every comment but I’d disagree with the perception that they were laughed at; the consensus seemed to be mildly positive.
Facebook stock dropped a lot after IPO. That is when Hacker News laughed at it. People rejoiced that the evil company was abandoned by the market. Sorry I cannot find out the exact post.
> Climate researchers say two Google searches emit 7g of CO2 – the same as boiling an electric kettle.
> ...
> If Wissner-Gross is correct then 3,500 tonnes of CO2 (500m x 0.000007 tonnes) are emitted every day through all of us performing Google searches. Or put another way, 1.28m tonnes a year. That's about the same as Laos emits each year, the 151st biggest emitting country in the world.
> All told, Bitcoin emits—by Forex Suggest’s estimate—some 57 million tons of CO2 annually, more than double Ethereum’s footprint. It’s noteworthy that for Bitcoin, all that energy generates a relatively low number of transactions. Because its distributed network is so slow, its users post only around 12,000 purchases, sales, and transfers on the blockchain each hour. That’s approximately 115 million transactions a year. By contrast, Ethereum handles over four times those volumes—devouring, once again, far less than half the juice. The result: Bitcoin deploys an incredible 707 kWh of electricity per transaction, 11 times as much as Ethereum, and emits 1,061 pounds, or half a ton, of CO2 every time you tap the app to buy a latte or zap a fraction to a buddy who beat you on a golf bet. Ethereum sends less than one-tenth of that carbon skyward for each purchase or transfer it processes.
----
So, roughly, bitcoin has a footprint that is ~45x larger than Google search.
Facebook is probably lighter than that, though that's only a "its probably lighter than that" guess.
Whoa, so Ethereum is burning 64 kWh per transaction?
I wonder if there is any mapping of “gas” to electricity. I guess it would have to be approximate but still, it’d be interesting to estimate how much electricity a particular smart contract consumed per execution.
This is the entire point of most PoW mechanisms. It's a way of "proving" that an miner expended a certain amount of effort or energy to validate a transaction. It also requires that expenditure to be significant enough that gaming the system is expensive. As a result most of of them scale as the effort inevitably get's easier thus ensuring that the energy required to validate a transaction will only ever be capable of growing not shrinking. If it is allowed to shrink the consensus properties start to fail. Whether you think this is a worthy use of that energy will depend on how much benefit you think the consensus properties of your particular PoW implementation are providing.
While I am sympathetic with your argument, don’t forget you’re just comparing energy consumptions.
We don’t know much about how its energy is being created. If 90% of Bitcoin’s energy use would be from renewables its CO2 footprint wouldn’t be 45x as large as that of Google.
There was a study a couple of years ago suggesting Bitcoin’s global footprint is comparable to that of a medium sized city. But its assumptions are probably outdated.
That green energy would have been used by someone else if BTC didn't use it. Put another way, if there had been one energy customer, X, instead of BTC + X, and availability of green energy was X + BTC/2, then fuelling BTC required generation of non-renewable energy.
That's not how markets work. Maybe on short term. If the demand for green energy is increasing due to Bitcoin, the production will also increase because it will drive profits of green energy producers.
It's more complex than that, but it's pretty much how the energy market works. Saying BTC only spends a special kind of sanctioned energy is magical thinking.
Why does BTC increase demand for green energy but not other kinds of energy? Or does it increase demand for all types of energy available in the grids in which it's generated?
> If the demand for green energy is increasing due to Bitcoin
I would much rather that the demand for green energy increase due to a desire to transition away from other energy sources.
If the demand for energy is increasing and being met with green energy without removing the other sources of energy, that's not entirely a win in my book.
The point isn't "this is how much CO2 google and bitcoin produce" but rather using the metric of CO2 footprint as a proxy for energy consumption to compare Bitcoin to Google to Facebook.
Whatever Bitcoin's CO2 footprint is, overall Bitcoin is consuming about 45x more power than Google over the course of a year.
Except none of those things has anything to do with bitcoin...
I mean, I'm not sure you're wrong here, it just seems like a step was missed. Your comment is about bitcoin, but your conclusion is about a bunch of stuff that does not run on the bitcoin blockchain. What's the missing piece here?
> Bitcoin is the scammers dream - remote, anonymous, irreversible transactions.
s/scammers//
also, not anonymous without huge effort and deep expertise.
exactly what money of the future is supposed to be.
want reversibility - build a company that offers it by taking on risk. want any other service that modern financial system provides - build it. doesn't have to be baked into the currency especially with all the destabilizing levers that come with those features.
> Remember, all this stuff is zero-sum. For every winner, there has to be a loser.
That's not how it works.
Suppose Bitcoin comes into existence and people mine a billion dollars worth of it. They now have a billion dollars worth of Bitcoin. Nobody else has lost anything.
If they sell the Bitcoin and someone else buys it, the buyer hasn't lost anything. They had $100 worth of cash and now they have $100 worth of Bitcoin. Provided the price is stable, their net worth doesn't change. If the price goes up, they make money. If the price goes down, they lose money. That part is zero sum, but the initial mining still created the value that it created.
It would only be zero-sum if Bitcoin goes to zero. Not just 5% of where it is now, actually zero. Because otherwise it would still have created whatever non-zero asset value people still ascribe to it.
The point is that for every dollar someone takes out of the crypto eco-system someone else has to put one in. With miners taking their own cut that means the game is actually negative sum for normal people trading in crypto currencies.
But it's not stable enough to be terribly useful for storing wealth or moving money, at least by the standards of normal legal assets. So most of the value must come from crime and speculation.
Same for most things. Guy grow potatoes sells some and uses the money to buy stuff. For every dollar he takes out of his potato ecosystem someone has to put one in. Just how these things are.
For miners it's positive sum. For people who buy cryptocurrency with government-issued currency it's zero sum. They don't show up with cash and go home with nothing. They get that amount of cryptocurrency. They only lose something if the value goes down. Which it might, or it might not.
I think Animats is calling it zero sum because the value of Bitcoin is essentially based on speculation rather than use so relies on new entrants to prop it up and the coins are generated within the system. Basically new coins do not represent new dollars coming in and generating new coins all the time is inherently deflationary. So not only do you need demand to outstrip supply to keep the value going up you also need new dollar entrants if you ever want to cash out.
> I think Animats is calling it zero sum because the value of Bitcoin is essentially based on speculation rather than use so relies on new entrants to prop it up and the coins are generated within the system.
This really depends on what you think is going to happen going forward. Surely the current value is propped up by speculation, but are the speculators right? Is future-Bitcoin going to be very useful and thus valuable for something, so that the speculators will eventually have someone to sell their Bitcoins to other than just more speculators?
It's not impossible for that to happen just because it hasn't already happened. It's also not impossible that it doesn't, in which case the speculators themselves will be the ones left holding the bag. But that's how it goes, isn't it? High reward, high risk.
Technically there is a cost per Bitcoin from the power and other costs that occurred from mining. Some might be not fully lost (GPUs, commodity hardware) but the kWh and custom ASICs are just a sunk cost.
If Bitcoin goes to $0.01 or even $5, I bet that makes most mined Bitcoins underwater like how pennies and nickels cost more than their face value.
Now you're talking about revenue vs. profit. That part of the "value" is still created, it just goes to the power company or the ASIC manufacturer instead of the miner.
If you mine $100 worth of Bitcoin, there is $100 worth of Bitcoin created, whether the electricity cost you $20 or $120.
This is not how 'creating value' works. If you create something that sells for $100 but cost $100 to be produced, you have created zero value, and if it cost $120 you have destroyed value. In economics this is called added value, it's defined as the value of the output minus production costs. The sum of all added value over a period of time amounts to the GDP.
It's still zero-sum - I'll illustrate with an example:
Imagine you and your friends collect and trade rocks you find on the beach. The more rocks you pick up and put in your personal baskets, the scarcer they become (just like mining bitcoins), so the work of finding more rocks becomes harder. This makes all the rocks you've already found "worth" more. Let's say for this thought experiment that there are 1000 rocks on this beach total.
The value of the rocks is only realized when someone decides they want to pay you dollars for your rocks in your pile instead of going out to pick up rocks themselves. This transaction (say $1 per rock for 100 rocks) now suddenly makes everyone's pile of rocks valuable, because there's someone out there who was willing to pay $1 per rock. If the next person pays $2 per rock for 100 rocks, then everyone's rock piles double in value. This means that the "market cap" for rocks on your beach is $2000 ($2 x 1000 rocks), but that doesn't mean that there is suddenly $2000 of USD in you and your friends' pockets. There's only the $300 that the two buyers paid into the system, but it wasn't generated by collecting rocks.
Let's say that the last 100 rocks are super hard to find - they might be buried deep in the beach and not worth digging with your hands. After a few hours the supply of rocks has essentially capped. The only way to get more rocks for yourself is to trade dollars for rocks. You open your wallet and buy 100 rocks from your friend for $500 dollars.
Now everyone knows that 1 rock = $5. Market cap = $5000.
Someone else wants to buy but it's hard to get anyone to sell. They spend $100 to buy just 10 rocks. Now 1 rock = $10, Market cap = $10,000.
Now that each rock is worth $10, people get shovels and try to find more rocks buried. Finally they've all been found. Let's say that 100 people total are now holding at least 1 rock.
Let's freeze it here and look at who has won and who has lost. Assume that finding the rocks didn't cost anything. From the perspective of everyone who simply picked up rocks, they hold rocks worth $10 each, but haven't paid anything to acquire them. Great right? Well not necessarily - nobody actually paid them anything yet, so they have realized exactly $0 in gains.
Let's look at the four transactions that occurred which gave the rocks value. The first saw $100 go from person A to person B, for a net of $0. The second saw $200 from one person to another, for a net of $0. Third, etc - fourth and final, also net of $0.
Within this example, trading dollars for rocks is clearly a zero-sum game. The only reason that crypto "looks" different is that it's a much larger beach with millions of rocks and millions of people trying to trade them and pick them up. But it's the same thing.
> Well not necessarily - nobody actually paid them anything yet, so they have realized exactly $0 in gains.
Except that they still have a rock that the market currently values at $10. The value of that clearly isn't zero, because it's $10.
The argument that not everybody could sell their rocks all at once and still get the same price is only relevant if that's what happens. It's like saying your shares in an S&P 500 index aren't worth the market price because of what would happen if everyone sold at once.
But dividends are zero-sum. The shareholder gets the money, the corporate entity loses it. The value created is the value created by the company's business operations, which is independent of whether any of the profits are ever distributed as dividends.
By analogy, it would be the value of the currency as a currency, i.e. to facilitate productive financial transactions that would not otherwise occur. The reason non-speculators would ultimately want to have any.
Nah the corporation is the rock - they aren't a market participant so them paying you and your friends a dividend isn't a net loss in the market for rocks. Instead simply holding rocks and not trading them is still generating money for the market participants.
Bitcoin doesn't generate intrinsic value from a business operation - it's just a digital version of a rock. There's no money for it to pay out. Therefore you have to limit the example to the exchange which gives it value, which again is a zero-sum game in a way that traditional markets for business and government equity and bonds is not.
> Nah the corporation is the rock - they aren't a market participant so them paying you and your friends a dividend isn't a net loss in the market for rocks.
Except that it makes the rocks not worth as much.
You had a corporation with a million dollar business and a million dollars in cash. It pays out the million dollars in cash as dividends. Now the rockholders have a million dollars in rocks and a million dollars in cash, when they used to have two million dollars in rocks. Their rocks decline in value by the amount of cash no longer inside the corporation.
> Bitcoin doesn't generate intrinsic value from a business operation
Sure it does.
Bob wants to buy something from El Salvador, the merchant in El Salvador wants payment in Bitcoin, so Bob has to buy some Bitcoin in order to pay the merchant. The more Bobs there are, the more valuable Bitcoin is as a currency, and the more the person holding the rock can get for the rock.
You, the holder of rocks, get the increase in business value as "rock price appreciation" rather than dividends, but you still get it.
Except that it makes the rocks not worth as much.You had a corporation with a million dollar business and a million dollars in cash. It pays out the million dollars in cash as dividends. Now the rockholders have a million dollars in rocks and a million dollars in cash, when they used to have two million dollars in rocks. Their rocks decline in value by the amount of cash no longer inside the corporation.
Nope, that is not the way it works. When you have ownership of a company (by holding stocks), the company can pay out a dividend and the price of the stock does not go down. On the contrary, the price of the stock may go up because the company has proven that it generates cash and will pay this cash out to shareholders periodically.
This is why companies viewed as assets have “intrinsic value” and something like BTC does not. If I own stock in a company that pays out dividends and the stock does go down, at least I still get money in the form of dividends. I can be assured that if the dividends continue (not a given), then the price of the underlying stock will “correct” to match the intrinsic value of the company over time.
Contrast that with BTC - I have no real way of knowing the “real” value of BTC. If the price goes down, then it may stay down forever as there is no way of accurately pricing it based on some real-world metric. It produces nothing, therefore this is why some people say it is not a good asset to own.
One thing I'd say is the volatility. Imagine Bitcoin as a global payment mechanism for the world. It's capped sure(21m) but volatile. You're buying something in El Salvador and someone/someones in the world make the price crash. By the time you reach for your phone in pocket to make the payment (say) and begin to pay, your item now costs double of what it should have costed. How does that work?
Corporations change. They employ people to innovate and labor. They aren't the same thing over time. But that BTC you own just sits there doing nothing. It does not change. The innovation and labor of employees drives up the value of a corporations.
Many stocks do not pay out dividends. Tech stocks from Amazon, Facebook, and Alphabet are great examples. The riches that these employees received through their rising stock prices has nothing to do with market expectations of dividends.
Dividends are distributed profits, and these companies all have made profits. They just didn't distribute them among shareholders. Distributing or not distributing profits is irrelevant as far as shareholders are concerned, since being the owners of the company they own the profits either way.
The important thing that differentiates shares and bonds from other assets such as commodities and virtual currencies, is that the former produce income (in the form of profits or interest) while the latter don't.
I disagree. Not with any particular detail, but with the "all told..."
I think it's incorrect to the of crypto-currencies/etc as heading towards some sort of equilibrium.
>>"Check out meme stocks a few years later. Remember, all this stuff is zero-sum. For every winner, there has to be a loser."
I think this is similar to the mistake of the last 4 decades' monetary/macroeconomic theory and practice. Expecting that inflation/default would ultimately balance/equilibrate rising public debt. Well... debt rose for decades while inflation remained much lower than it had in earlier periods.
Same here. Sure, the equilibrium price for bitcoin may be zero. In that case, for every winner there is a loser.
It's not really zero-sum though, because hedge funds are pouring billions of dollars that they don't care about losing in order to jump start the crypto economy. Who is the loser? Their investors who won't even notice? It's fake it till you make it. I think they're going to make it.
Prior to COVID-19, there were protests going on in 16 different countries. Fast forward to today, there are still protests going on globally [1]. The US has printed more money in the past 2 years than ever before [2]. At least half the country believes an election was "stolen" [3]. Ghislaine Maxwell is on trial while being linked to some of the most powerful people in the world [4].
Whether or not you agree with the different thoughts people have about any of these things, I think it's possible that there's in fact a movement into Bitcoin borne out of more than just "greed," but instead, fear and hedging.
I agree that there are a lot of horrible shit coin projects out there, but there are also several blockchain projects utilizing the new technology for its intrinsic value of decentralization and what that affords.
Hillary Clinton seems to believe that cryptocurrencies are about nation state vs the next social mechanism [5]. It's likely true, and that change is being brought forth by blockchain. Books changed the world. Churches changed the world. Radio and TVs changed the world. The Internet began to decentralize it... and blockchain is finishing the job.
> If the price of Bitcoin had been stable for a decade, and it worked reliably, it would be a useful medium of exchange, but nobody would care. This is all about MAKE MONEY FAST.
Your counterfactual is nonsense. There is no world where Bitcoin remains stable for a decade. It's precisely the nature of Bitcoin that it either eats a large fraction of global monetary value or ends up close to zero. Bitcoin's existence provides the purest possible application of Gresham's law. The price of Bitcoin reflects the imputed probability of bitcoin eating monetary value, as well as the fraction it ends up eating.
> all this stuff is zero-sum
Bitcoin is positive-sum if you believe in the benefits of sound money, but yes, people who are net dollar bagholders (e.g. US govt and people with US govt debt) will lose wealth if Bitcoin successfully demonetizes the dollar. It would probably be wise to hedge against this scenario by balancing long dollar positions with long Bitcoin positions.
I completely agree with the author. I've been reading a lot about the EVM, and while there's some interesting technology involved, it feels unlikely to be able to support any worthwhile applications outside of blockchain finance or moving $ around the world[0] (since the code can really only directly reference the blockchain itself).
It's a bit like playing with a programming language in a sandbox that has (1) has no I/O functions[1], and (2) has enormous costs associated with even the most basic of computations. Ok, it's not like that; it is exactly that.
Sure, you could build a crypto toy and convince some suckers to transfer some of their wealth to you, but calling it an app platform or the next evolution of the web is definitely a stretch. I sincerely wish that wasn't the case (I'd love to find an exception), but that's what I've come to conclude.
[0] Don't get me wrong, there's tremendous value in being able to move money around the world without the blessing of governments and central banks!
[1] Any interaction with entities outside the blockchain require oracles, and at that point, you might as well throw away the other benefits of being on a blockchain.
Output: Digital services, site subscriptions, digital assets, in-game items, NFT's representing real world assets held by trusted companies (wine, event tickets, tokenized securities).
None of this requires oracles and exists today.
Your mistake is thinking that just because the base layer is decentralised that we're somehow not allowed to connect to companies we choose to trust, just like we all already do.
Then it becomes interesting because there's a programmable market for these assets/services that didn't previously exist because the underlying value was not represented in an exchangable form. The outputs are also inputs.
Ethereum is the trustless, standardised substrate on which trusting parties can interact.
HackerNews will continue to fail to see the utility of this system for years to come until it's mature and undeniable. It will be an interesting case study into how experts missed the potential of emergent technology in the same way we look back on yesterday's commentators not realising the disruption of Amazon or the internet.
As to your second point, it's unlikely the end user will ever want to transact on layer 1. Layer 2 technology is making steady progress. See l2beat.com for examples.
> Output: Digital services, site subscriptions, digital assets, in-game items, NFT's representing real world assets held by trusted companies (wine, event tickets, tokenized securities).
> None of this requires oracles and exists today.
While I only mentioned oracles specifically, I should have clarified: I'm referring both to oracles (making queries to external data sources and providing the results to the blockchain), and to external code that interprets data stored on the blockchain and acts on it. I'm not sure if there's a name for it in common use (I'd call it something like a "performer"). Either way, the issue is the same as that with oracles; whatever decentralization or smart contract guarantees you had on the blockchain disappear as soon as you have external code interpreting blockchain data to then make decisions in external systems (digital services, site subscriptions, digital assets, in-game items, NFT's, etc). If oracles provide inputs to the blockchain, these non-blockchain pieces of code provide the real-world outputs.
Example: even if somewhere in the blockchain I can prove that I should own something in the real world, it's still up to your site/service/app/whatever to honor that through external code. If it doesn't honor it, I'm stuck relying on traditional legal means to intervene, just as with any other standard contract. That legal system – as flawed as it is – tends to work for contracts written on the back of a napkin, stored in a SQL database, or coded in a smart contract (though that's probably the most questionable at the moment).
If I'm wrong, please correct me, but I've been interested in this stuff for a while, and I haven't found anything that actually solves the fundamental problem of oracles and the interpretation of blockchain data. That problem is important because it undermines many of the primary selling points of smart contracts.
> Your mistake is thinking that just because the base layer is decentralised that we're somehow not allowed to connect to companies we choose to trust
So, honest question: why care about the base layer being decentralized if in the end, you choose to trust those companies? What did the decentralization do for you in that interaction?
Yep. Blockchain says I own this case of wine... but the other guy wont give me my wine! Who do I call? The physical, centralized police and the centralized legal system that back it. Without that legal system recognizing and honoring it, it's worthless. And if it all depends on my centralized legal system, then who cares about the decentralized blockchain. Might as well put it in a table in a database instance running on AWS, or in a written contract.
You could say the same thing about property deeds, contracts, etc. The fact that the laws of physics still apply in the world and thus people can still physically take things from you, harm you, etc. is hardly an argument against any specific method for establishing and recording ownership or contracts.
No, the basic problem is ownership rights over physical objects can't be enforced without coercive power, but blockchains and smart contracts can't use coercive power, therefore they would have to rely on an external entity to enforce such rights. But then the system is no longer "trustless", "permissionless", or "censorship-resistant", and therefore we have none of the supposed benefits of blockchains but we do have all of the inconveniences, which means at this point we're better off with a centrally-managed registry which at least is cost-effective.
This is a strawman. The entire ecosystem does not have to be 100% decentralised. There is massive utility in a trustless, permissionless, censorship-resistant contract layer connecting disparate centralised entities. A centrally managed registry would never be suitable for this task for a multitude of obvious reasons.
> There is massive utility in a trustless, permissionless, censorship-resistant contract layer connecting disparate centralised entities.
No, there's no utility in that, if ultimately enforcement relies on an entity that needs to be trusted and can override the blockchain.
> A centrally managed registry would never be suitable for this task for a multitude of obvious reasons.
Centrally-managed registries are already in use and have been in use for a long time, they exist in every single country, and entire markets depends upon them, but somehow they "would never be suitable for obvious reasons"? They have already been shown to be suitable, what on earth are you talking about?
I'm talking about a global, universal API layer supporting standardised contract enforcement and value transfer between applications. A centralised implementation of this would clearly be a bad idea.
If you don't see utility in this I don't know what to tell you.
> I'm talking about a global, universal API layer supporting standardised contract enforcement and value transfer between applications.
What does that even mean? How is a global API going to support the enforcement of a rental agreement? Or of a bond indenture? Who is actually going to enforce the contract? And what is the role of a global API in that? And what do you mean value transfer between applications? You want to transfer "value" (like a bag of rice?) between computer programs??? None of that makes the slightest sense. Meaningless gibberish intended to fool gullible idiots into thinking that blockchains are some kind of disruptive technology that is going to turn everything upside down. Nonsense. It's a pump & dump scheme, and little else.
Ignoring the condescending tone, value is already being transferred between computer programs. Trillions of dollars per year on Ethereum alone. A lot of the volume is undeniably speculation but denying that value can be transferred on blockchain is denying reality at this point.
Ethereum allows you to transfer digital tokens from one address to another. This is what it does. Calling this "transferring value between computer programs" is both inaccurate and pompous. It's like a truck driver insisting that you call them a "transporter of value". Nobody speaks like that. Your comments consist entirely of marketing buzzwords, which is unfortunate because this is a technology site and we're trying to have an honest discussion about technology.
I'm having an honest discussion. You have accused me of being "a gullible idiot", "pompous" and of using "marketing buzzwords" (which words?). You come across as being very emotionally attached to your negative opinion of the space.
Value can be transferred between programs through Ethereum. The tokens you mentioned have value, because people are willing to exchange them for money. So it's not an inaccurate statement. Web3 provides the standardised API through which these programs can communicate.
Don't twist my words, I never said that you were a gullible idiot. I said that using the term "transferring value" is inaccurate and pompous, and that you are using marketing buzzwords. And I stand by that, "transferring value" is an example of a marketing buzzword. It's not a descriptive term, because what is being transferred is digital tokens, which may or may not have value. Whether they have value is irrelevant as far as the technology itself is concerned. I don't have anything against you personally, but this is the way I see it.
If it helps you can read 'transferring value' to 'transferring digital tokens which have value on the market', the distinction is irrelevant to the point.
> Whether they have value is irrelevant as far as the technology itself is concerned.
I'd argue that it's not irrelevant. The whole point of the technology is, at risk of more 'marketing buzzwords', a decentralised way of moving value around (moving digitised tokens which have value on the market, around).
I had a look at your post/comment history. It's almost exclusively cryptocurrency focussed. I'm curious why you spend so much time discussing a technology you clearly don't think has a future.
It is irrelevant. An automobile engineer would not describe a truck as a "vehicle that transports value", despite the fact that most of the time trucks are used to transport valuable things. It's ridiculous. Nobody in finance refers to financial assets as "value" either.
Why are my comments focused on cryptocurrency? Because I like to discuss cryptocurrencies. I have thought a lot about them, and I think it's an interesting phenomenon from an sociological point of view. Plus, I like arguing with people who I think are wrong.
Imagine something like Robocop hooked up to the EVM, if you put your RealID in the escrow contract and then the ubiquitous camera network is unable to verify that you honored the transaction, well then you have 15 seconds to comply…
I worry that this is the endgame; you say "distributed organisation", I say "autonomous cyberweapon".
We're not that far from having a DAO that can bid on zero-days and use them against a list of targets of its choice. If a DAO can make POST requests it can launch exploits. A script kiddie without the kiddie.
Blockchain governs the DIGITAL sphere and in there can actually enforce. People who are trying to combine crypto with physical assets are a shrinking number. Focus on digital and its absolutely enforcable, to an extent not even governments can accomplish.
Not at all, blockchains can't enforce intellectual property rights either. For example, how is a blockchain going to stop an individual from using unlicensed content on their website?
With enforcable, what is meant is anything that can be programmed into a contract and be executed will be executed (enforced).
That can as an example be someone raising a million dollars for a crypto game by offering 10000 tokens for 100$ each. The million dollars are going to be unlocked in phases. 50k for proof of concept, 250k for alpha etc. Each phase have to be approved by the toke holders. If they dont agree that the proof of concept is good enough they can vote the unlocking down and there is nothing the game developers can do about that. That is what is meant by enforable.
We already know what "enforce" means. You said blockchains can enforce "digital" whatever that means. The only thing blockchains can "enforce" is that data are added to the chain according to some rules. There isn't any type of property right, digital or real, that can be enforced in this way.
I already explained what enforcement means in this context giving you a very concrete example. Why don't you show how that example is not what I claim it is. Instead of just repeating what you already said.
I can't help you see something you don't want to see.
> Why don't you show how that example is not what I claim it is.
Because, quite honestly, I don't what your claim is. You're saying that a blockchain can "enforce DIGITAL" which is a meaningless sentence. Are you claiming that you can write a program and execute it on a blockchain? Sure. I can do the same on my computer. This is not an example of enforcing property rights, which was what we were talking about.
You replied to a comment where I argued that property rights cannot be enforced with blockchain technology. So, yeah, it's pretty obvious that we were talking about enforcement of property rights.
> Focus on digital and its absolutely enforcable, to an extent not even governments can accomplish.
The Winklevosses came up with an elaborate system to store and secure their own private keys. They cut up printouts of their private keys into pieces and then distributed them in envelopes to safe deposit boxes around the country, so if one envelope were stolen the thief would not have the entire key.
the only thing the system can do is ask more and more from their users, but there is no way to know if the transaction is good: if it looks good, it is good.
so it can't enforce anything on its own.
a CC payment can look good, but it can be reversed because there other other channels, outside of the CC circuit, to prove those transactions are to be considered fraudulent.
There is no such mechanism in the crypto space, so basically they are good unless you have an issue that can't be solved by the chain itself.
Because the chain can't enforce anything.
p.s. note that I wrote the keys (plural) not the key (singular)
basically your answer is "have a multifactor authentication" but if that is broken by some malevolent actor, I can go to the police.
There's not true fro Cryptos, if they are stolen they are lost.
I have answered it and again you are answering it ex. here:
"A CC payment can look good, but it can be reversed because there other other channels, outside of the CC circuit, to prove those transactions are to be considered fraudulent.
There is no such mechanism in the crypto space, so basically they are good unless you have an issue that can't be solved by the chain itself."
This is a feature NOT a bug. It comes with it's own consequences of course but that's exactly what makes it enforceable just like physics enforce its laws.
This is a complete FAILURE to enforce property rights. If by stealing your car, I automatically own it, that means there are no property rights whatsoever.
No it's not. You are assuming that the entry on the ledger is a person it's not. It's a thing. I can steal all sorts of things from you in real life and if you don't know I stole them, then they will be gone forever.
You are still not understanding what is meant by enforcing.
> You could say the same thing about property deeds, contracts, etc. The fact that the laws of physics still apply in the world and thus people can still physically take things from you, harm you, etc. is hardly an argument against any specific method for establishing and recording ownership or contracts.
On the contrary, it's a strong argument for using those methods of establishing and recording ownership that are blessed by the relevant local legal system (or, sure, ultimately by those who control local violence, if you want to go all the way down). It's the reason why you get lawyers still insisting on using faxes rather than emails.
> This <legally enforceable contract> says I (should) own this case of wine... but the other guy wont give me my wine! Who do I call?
Answer: You have a cause of action for breach of contract. In UK/US/Aus/Canada/etc, you can "call" / take it to a court, and they may grant you the remedy known as specific performance, which is essentially a court order to do the thing that was promised. This remedy is available because the thing to be done was the transfer of property. The remedy is part of the law of Equity, a set of doctrines and principles that has been in development since the 13th century. It got its big break with people complaining to the King of England that "the law is too harsh, it should be fair!!!" and went from there, eventually becoming a huge body of law about exactly what it means to make the law fair, what principles to follow when doing that, and how to deal with the many categories of unfairness that come up regularly.
You might look at the DAO hack in this context and think, the Ethereum folks really threw out the baby with the bathwater when they decided to invent a new financial system that didn't have to play by the existing rules. Many people talk about ICOs etc taking us back to the 19th century and the Wild West, but smart contracts take us back hundreds of years further back, with echoes of literally the first people to complain to the King demanding a writ to remedy the injustice of the Common Law. If since then blockchain enthusiasts have come up with something better than Equity, I would ask that they let us know.
Main message from the people in The System to you: We have thought of all of these problems before, and we have solved them all before, and if ye who have spurned the legal system come running for help, ... we will actually welcome you with open arms, like we aspire to do for everyone else.
It is an argument against unnecessarily elaborate and complex methods of recording contracts like crypto.
A lot of important, trusted systems often don't have particularly sophisticated security in every single layer. Homes and mailboxes have simple locks. Online transactions have fairly basic digital integrity checks (ie. you connected to a bank's server using HTTPS with a secret cookie). Credit card chips and card readers are riddled with vulnerabilities. We still sign legal documents with like, pen and paper and a scribble that even children can forge.
These systems are still trusted because trust isn't established by infallible recordkeeping processes, it's the humans and the organizations and the written/spoken promises we make that matter. A legally recognized scribble is as trustworthy and useful as a foolproof NFT. Crypto's complexity adds very little in practice.
Sure. You need a state to enforce property rights.
But the point is that the centralized system that managed property deeds does not require an absolutely gargantuan amount of computation to be performed to do a basic transaction. And since I already need the state to enforce property rights, why not have the state also be involved in the recognition of who owns what?
> So, honest question: why care about the base layer being decentralized if in the end, you choose to trust those companies? What did the decentralization do for you in that interaction?
My trust extended only as far as a single interaction/asset. The rest of my wallet and the assets within are completely unaffected. A company might rip me off, and I might have legal recourse, or I might not. Such is life. We won't ever be able to decentralise away all trust. A single entity isn't able to manipulate all my assets, or print more tokens, or confiscate my money. The network is solid even if all the 'performers' are not.
To build a centralised 'universal API' on which applications can communicate and exchange value is a terrible idea. Who would own it? But such an API is surely a useful technology.
We do need reliable oracles for external data feeds- prices, weather, news... can all feed into contracts for extra utility. This is a hard problem being tackled by ChainLink and others.
Let's say everyone on the planet is Ethereum enabled tomorrow. What is the business case for the winery to use it in your example? I get that Ethereum or any other crypto can be another payment option for their customers. Beyond that what use does a winery have for a programmable substrate underlying its transactions with customers or suppliers? I'm not saying there is none but if you're going to rip on HN users, frankly it's hard to parse what this language even means.
I’ll bite. A winery could sell ownership of wine stored or wine yet to be made. The purchaser, if sold via an NFT, could resell that ownership with no interaction with the winery until claiming the wine at a later date.
This means both parties no longer need any relationship between the initial sale and claiming the eventual goods. The winery will simply be able to wait for someone to return with proof of ownership at a later date.
If the winery gave out certificates or built some app it would need to verify and maintain that. With an NFT there is very little work on their end.
Ultimately this turns these type of products into highly liquid assets. This will greatly increase their value to a potential customer and the initial purchase price. Which will make the winery more money for the wine it sells.
This can effectively be done with anything that can be claimed at a later date after initial purchase.
The question is can you really make it simultaneously cheap to trade and decentralized and always on. Or is the overhead of all that just make blockchain tech very awkward and suboptimal (especially since ultimately there's a centralized winery that honors the "claim" with actual wine - so no real need for decentralization). Instead why not just have a little centralized company that lets companies create ledgers of asset ownership for $300/month. If it's a real use case, any winery can sign up, etc.
Issue is blockchain tech doesn't actually solve anything
Transactions on most L2 chains these days are less than a penny.
There are dozens of popular mobile wallets that make viewing, sending, receiving coins / nfts trivial.
The problem that it solves is that there is no need for you imaginary ledger company to exist at all in a blockchain model, the winery cuts out a rent seeking service and the user gets a more secure and portable product.
Automation isn't just going to hit manual labor, blockchain and web3 will allow for the emergence of fully autonomous "companies" that operate via smart contracts.
Is this secondary market of goods yet to be produced something that people actually want to have?
Today the way this works is usually with a ticket or a receipt. The guy with the email receipt on his phone gets the food he ordered. The guy with the ticket gets into the concert.
There IS a secondary market for event tickets. Legitimate transfers frequently happen everywhere else e-commerce happens. Questionable transfers happen on the street in what I assume is low volume.
I’m not saying blockchain makes this any better, except in one sense: a lot of people with a lot of money are enthusiastic participants. If I had a winery you bet I’d be selling wine future NFTs, just to try and get the price bid up.
That's great! Hey look I would like to send you the rights to my crate of wine. You're the 1000th customer to my site. Or maybe you want to trade it for your in-game weapon. Or I just like you and it's a gift, anonymous internet user.
Of course I could just transfer directly to your Ethereum wallet. But why do that when I could explain you need to sign up to 'winespectator.com', I'll email them to arrange the ownership transfer, and if you're trading that weapon let's both sign up for a pre-agreed escrow service online and pay them a commission to arbitrage. How many forms do we need to fill in, and who is processing that data? I currently own my crate anonymously- only the person who eventually burns the token will need to provide details to the company for delivery.
As always, descriptions like this betray how little engine-peddlers know about horse breeding. Managing a stable has been a thing as long as there's been horses.
> Hey look I would like to send you the rights to my crate of wine.
You truly believe this can't be done without blockchain?
> You're the 1000th customer to my site.
You truly believe you can't track customers without blockchain?
> Or maybe you want to trade me for that in-game weapon.
You truly believe it's impossible to implement in-game trading without blockchain?
> Of course I could just transfer directly to your Ethereum wallet.
The only thing you could transfer is some meaningless numbers. What makes them meaningful is some central, trusted authority that will accept these numbers as proof of something. But then, since you depend on that authority to verify this... you don't need blockchain.
I think instead of reading what I wrote, you read "you need a blockchain to do this".
The anti-blockchain narrative on here is constantly attacking the strawman of "literally everything must be decentralised".
I'm arguing that a decentralised medium of exchange through which separate points of centralisation can interact is still a useful construct.
You're comfortable with your assets being codified in a thousand different databases in a thousand different representations but the concept of having a common database representing them as "meaningless numbers" is suddenly unacceptable.
So... Why did you write it? Of course you don't need blockchains to do this.
To reiterate: The only thing you could transfer is some meaningless numbers. What makes them meaningful is some central, trusted authority that will accept these numbers as proof of something. But then, since you depend on that authority to verify this... you don't need blockchain.
The blockchain facilities standardised transfer across a decentralised medium. I'm not sure how much clearer I can make my point. You could code alternatives to all the use-cases mentioned, but when you have an existing platform on which to interact, why bother? You want the game developers to implement the winery's API?
> The blockchain facilities standardised transfer across a decentralised medium.
It hasn't. It standardised the transfer of otherwise meaningless numbers, that's true.
In order for your winde order to work, a centralised, trusted party has to verify and accept those numbers, and say that, yes, they represent something meaningful to them.
The same goes for every other example. "Want to trade something for an in-game weapon": This only works if that game a) provides means of trading in-game items, b) can verify that a number in the blockchain actually represents an in-game item etc.
Without countless external entities agreeing to and cooperating on the meaning of this data this "standardised transfer" is literally meaningless. And these agreements will go as well as they already do in reality. How does blockchain factor into this?
> if you're trading that weapon let's both sign up for a pre-agreed escrow service online and pay them a commission to arbitrage.
>> The blockchain facilities standardised transfer across a decentralised medium.
>It hasn't. It standardised the transfer of otherwise meaningless numbers, that's true.
Sure, but that alone can have value. The idea being that people have already built entire trading platforms around tokens, fungible or not. Somebody who wants to enable easy trading of some asset (or futures contract or whatever), hoping for improved liquidity, could see using the platforms built for crypto token trading as much easier than trying to build their own exchange. Especially if it is anticipated that physical settlement demands will not be especially common.
To be more concrete: It might be simpler to get your single-vineyard wine futures up and running on crypto than trying to get it listed as a new contract type in a traditional futures exchange.
Now sure, nothing about getting your weird futures contract into some form of widely used exchange requires blockchain technology. It is merely leveraging the existing infrastructure others have already built around crypto.
This is not too dissimilar from the various ways people have found to get say precious metals as listed items on stock exchanges, despite traditional commodity exchanges or brokered OTC trades also existing. Obviously nothing about speculating on (or maintaining market liquidity for) precious metals requires a stock exchange, since we have those other ways of trading. However people have found getting access to the stock trading market to be worthwhile.
Obviously settlement for physical goods is a centralized processes (or possibly a somewhat decentralized process relying on courts and contracts). This is equally true for any exchange, crypto-based or not. The actual order matching process somewhat separate from the settlement process in traditional exchanges too.
I certainly would not argue that similar platforms could be set up not reliant on crypto in any way, and those could be superior (although network effect problem tend to plague attempts to set such things up if any sort of scale is desired). Most crypto stuff is still extremely overhyped, and a lot of interest in crypto seems to stem from crazy speculation, or people trying to avoid their government in some manner. (The latter is not just things like drugs, arm sales, or money laundering. It also includes more innocent reasons like people in countries with failing economies being terrified that their government can just seize the contents of forex accounts, stock exchanges etc, making their attempts to hedge against local economic collapse potentially futile. But governments cannot readily seize crypto wallets the same way, at least not unless you leave your holdings at some exchange.)
Yes. It may have perceived value. I mean, people spend money on useless skins in games, and perceive those as having value.
> Especially if it is anticipated that physical settlement demands will not be especially common.
Of course, you're buying wine futures and you're hoping that no one will demand the actual physical settlement of, you know, delivering you the actual wine. Sure. That's what NFT scam is all about.
> It might be simpler to get your single-vineyard wine futures up and running on crypto than trying to get it listed as a new contract type in a traditional futures exchange.
Call me when
1. might becomes is, and
2. it actually requires blockchain, and
3. has any applicability on the real world (like enforcement of contracts)
> Obviously settlement for physical goods is a centralized processes (or possibly a somewhat decentralized process relying on courts and contracts). This is equally true for any exchange, crypto-based or not.
Your so close to getting it.
> like people in countries with failing economies
I wish crypto-peddlers would stop pushing this extremely stupid narrative.
Ah yes. The market of on-chain assets. Self-reinforcing, self-congratulatory mass speculation and scams. There's an abyss between this, and even wine futures.
The interesting thing is not that you would need a blockchain to trade wine futures — obviously you don’t.
The interesting thing is that if you can sell the futures as (for example) NFTs then you put them into this Wild West of crypto enthusiasts where
1) All kinds of unpredictable things might happen to the token between sale and redemption! And
2) The culture of crypto enthusiasts might very well lead to much higher prices for your wine than people who actually know about wine think it’s worth, cf. Beeple.
Either or both of these things might motivate a winery to give it a shot, tokenize a few thousand future cases of their weakest plonk, and see what happens.
Just because your market works fine without the blockchain doesn’t mean there’s nothing to be gained by trying.
On the other hand, it might be illegal because: alcohol.
You said blockchains are more practical, in the present tense. The evidence strongly suggests that's not true. And there are plenty of reasons to think they will continue to be impractical in the future.
Stock brokers track perfectly the transfer of people rights to stocks millions of times a day without any decentralized ledger. In fact, a SQL DB has worked quite well for many years now.
If the wine cellar wants their customers to trade wine, I'm sure a centralized ledger based on a SQL DB would be much easier and cheaper to implement and scale to millions of transactions.
Yeah, that's surely trustless. And I totally trust the wine company to perpetually maintain and pay for such a thing, and totally not restrict the secondary market as has happened all the time.
> In fact, a SQL DB has worked quite well for many years now.
When you allow people to write their own smart contracts, bugs will happen. This can't be fixed, only dampened with a weakened interface to the blockchain.
When a bug in a smart contract happens you may now have a dispute, across borders, over the intent of the smart contract and the actual behavior.
Can I trade my wine in the weekend? Ah no, sorry, stock market is closed then.
Can I trade my wine at 5pm? Ah no, European wine stock market is closed then.
When you really 'own' the ticket, you can trade it anywhere you want, without being dependent on some exchange that's only open whenever and takes some fixed cut without any competition.
The fact that you can't trade on weekends is not because some technological problem, it's because there's no demand for trading on weekends. Do you think the technology suddenly stops working on weekends?
Yes, this is probably what you'd do in this hypothetical case, and it's hardly unheard of for contracts to be written up with transferability clauses. Given that we exist in a world where digital signatures also exist, it's unlikely to be particularly onerous.
("Continuously" is probably not the right word, unless you are envisioning the rather unlikely case of this transfer happening on an annual basis!)
Sure, or if you're willing to trust an electronic database you can put it in an electronic database. How do you think wholesalers buy and sell wine at the moment?
What happens if the wine goes bad? Who/what arbitrates in that scenario? Because from the winery's perspective, whoever currently holds that contract owes them money for the wine at a fixed price that was determined and sold in the past.
If I hold that contract and have to take delivery of rancid wine instead of fresh wine like I imagined, what's my recourse?
Basically how do you ensure the state of the real-world asset remains fixed throughout the duration of the contract?
In the case of wine, the real-world version of “going bad” is just that it’s not very good. When you bought the future wine, you were betting that it would be very good wine and you could resell it for more. The winery was selling it to you for “cheap(er)” because you assumed that risk.
So for actual wine, right now, you have no recourse: you bought the risk. I don’t think this would be any different with NFT-wine. Now and in the NFT case you already paid the winery, you owe them nothing more.
Now if they cheat and give you water instead of wine… I guess whatever real-world contract says you can exchange this token for wine would say which wine?
Most likely the first N wineries to do this would do it as a publicity stunt, and if it proved useful then there would be some precedent. Much of the wine world operates on reputation and trust.
For the vast majority of physical products that are not like wine: you’d need real-world contracts to back your smart contracts and the latter would only be useful for decentralization of the secondary market.
IIRC with wine futures you have to either collect your wine or pay for its storage, if you abandon it then at some point (per the contract) it belongs to the winery. At least with wine I think there is a lot of precedent here, there are norms you’d want to fit your crypto doings around.
Personally, I don't want the world to go back to "Bearer Bonds", and given they were banned I'm guessing the US government (and I imagine other countries) doesn't either. However, I'm glad to hear a basis for NFTs.
What does facebook give it? A free marketing page and limited discussion board and the ability for anyone to find it.
Ethereum would give it another payment option for customers. But also another payment option for suppliers. Could open a new hidden supply chain where a middlemen is not required.
It doesn't solve physically shipping but it does resolve one problem. Prompt payment resolution. A check can take 7 years to bounce.
A winery could assign a token to each physical bottle, and lets its customers freely buy (winery is involved) and then exchange their tokens based on the supposed bottle value ups and downs (winery is not involved any more). Then, from time to time, they come to the winery to take back a real bottle from a token.
Admittedly, there is little to program, but we can imagine all sorts of auctions, games (tokens becoming playable items in a virtual world, but still exchangeable for real bottles), etc., around those tokens.
Why would any of this need cryto? If you trust the winery to hold the wine you could trust them to rule the exchange. Each bottle could still have a token. Values could still rise and fall. All stored on a central exchange. These tokens issued by a trusted entity could perform the same function and can be cashed out.
The key feature of cryto is around connecting trustless entities. Once you centralize on a physical product stored in a trusted location by a trusted party you lose point involving cryto. Who cares how secure the token is when the winery can switch labels?
> Why would any of this need cryto? If you trust the winery to hold the wine you could trust them to rule the exchange.
That’s a little like saying “why would the winery need Apple to make computers for them, the winery could just develop their own computer hardware and software.” It doesn’t make sense for most wineries to develop its own online exchange system, and the fact that it’s technically possible for a winery to develop its own exchange system doesn’t mean that all existing exchange systems are pointless.
The critique being made in the original article, I think, is that it's extremely hard to find a hypothetical use case for blockchain technology that can't be done without blockchain technology. A wine exchange seems to pretty clearly fall into the "things we can do pretty well without crypto" category, so one needs to explain what crypto is bringing to the party that makes it a marked improvement. In this particular example, both "trustlessness" and "decentralization" are off the table (e.g., there is only one winery and you are trusting them to hold the physical goods).
Maybe, but there's some assumptions buried in here, I think:
- first, the token has to be usable by any exchange it's traded on. Different blockchain technologies may not be compatible. (For instance, you can't move an NBA Top Shot NFT from Flow to Ethereum.) This is a solvable problem from a technical standpoint, but given how fiercely ideological different blockchains are, there may be non-technical stumbling blocks that arise here.
- second, there has to be an "off-the-blockchain" legal connection between the token and the object the token represents, something that's recognized legally as a "bill of sale." This isn't a huge hurdle and I'd assume the purchase of the token includes language that covers this, but that legal language might include arbitrary limitations, such as stipulating that if you don't use their preferred exchange they'll charge you extra fees, or even restricting the token to specific exchanges entirely.
This is an issue that I think a lot of "smart contract" proponents just haven't come to grips with yet: when you read "contract" in terms of a blockchain, think "API contract" rather than "legal contract". A cursory search suggests there are Flow to Ethereum NFT converters out there, but if you run your NBA Top Shot NFT through one, does the NBA still consider it valid?
- third, this example is specifically tying the token to a physical object, which adds other complications. You may be able to successfully trade your token on Sunday, but the wine store may still only be open on weekdays.
The point is that there are multitudes of other technological solutions readily available which solve the stated problem far more simply then a blockchain.
Of course there are alternatives, and some alternatives may be better or worse depending on the features and qualities you desire. Again, there’s nothing unique about blockchains here. You could say the same thing about any random pick out of the top 50 CSS frameworks.
HN users only see an inferior tech stack, but fail to understand that an inferior tech stack might have Greater Utility for the common people.
HN users earn their living by being the best at what they do and choosing the best tech stack is a part of it, which is why they don’t understand blockchain. It’s an inferior tech stack, but it beats every other stack on game theory, which is not the usual purview of the average developer. Hence they reject it as “inefficient” because they keep looking at it through the prism of tech instead of society.
For society trustless distributed systems are better, but if you keep looking at it from a tech/throughout perspective, you’ll never get it.
ETH's current scalability problems are beyond terrible, but there are alternatives. You can use chains like Polygon or Avalanche that are EVM, so you get all of the capabilities of Ethereum, but without insane gas fees.
There are non-EVM solutions as well like Solana, which has substantially higher throughput while transactions cost a fraction of a cent.
Try out other chains than ETH before ruling out web3 imo. There's a lot of engineering and incredible products outside of the main ethereum ecosystem which is being masked due to ETH's scalability problems.
There are also standalone computation solutions that are under development such as Truebit, which if successful, could allow for smart contracts to execute complex calculations off-chain, avoiding both the increased gas fees due to complexity, and bypassing the gas limit altogether.
I've looked into some of the engineering that goes into Web3, and while I'm incredibly impressed, I can't quite shake the feeling that all we're doing is getting really good at counting paperclips. What real world problems does Web3 solve? It seems like Web3 has a ton of great solutions to problems that Web3 creates. Most problems that Web3 claim to solve can be solved through non blockchain solutions and even decentralization doesn't require a blockchain. The Internet is already decentralized to begin with.
Personally I've been exploring the concept of proof of ownership in the NFT space. I think there is a lot of potential in the technology that helps benefit creators and cuts out the middle man. I know we are quite a ways out from doing something like this, but it is feasible to do something like self-publish a video game and distribute as tokens, then sell it on a decentralized platform. It would cut platforms like Steam who take a large percentage out of the equation. Of course, Steam as an ecosystem is incredibly valuable, but it's just the first example that came to mind.
Really, the way I look at this is that in the past few years we have had a lot of engineering talent to explore the space and come up with unique products and ideas that the web3 toolkit enables, and we'll continue to see growth in the space.
My first proof of concept dapp I made earlier this year was a scheduling application that allows for you to arbitrarily schedule something on another ethereum address' calendar, assuming that they have initialized their profiles and set their rates, using an escrow to handle all monetary interactions. I could then host my dapp on a file storage system like arweave or IPFS, paying one time for hosting instead of a perpetual hosting fee. It wasn't perfect but it was a fun proof of concept.
But yeah, I think we'll continue to see a lot of innovation in the space, and see some really cool products over the next few years. If you have any doubt, the fact that a company the size of Facebook decided to pivot their company, brand and all, towards metaverse development (which will directly be utilizing NFTs), that should be a signal that web3 is going to continue to evolve.
The internet is not decentralised name one application or website which does not require a server in the middle between two clients.
Edit: but I agree there are already ways Web3 things can be done, and decentralization can be done without blockchain - the question I think is whether this impressive engineering is better than the existing ways
> ETH's current scalability problems are beyond terrible, but there are alternatives
The only alternative is ethereum L2s. Avalanche, solana, etc are centralized VC chains that do not have the foundation needed to be the infrastructure of tomorrow.
I keep hearing this argument but I really don't buy it, sorry. I think that over time these other chains are also going to naturally decentralize, at least in the case of Solana the primary barrier of entry is hardware. I think that actually having a product that works today is more important than a platform that hasn't been scalable since inception. Maybe ETH 2.0 will release sometime and all the ongoing scalability efforts actually do work, but until then I think it's absurd to write off other chains that are vastly outperforming it.
Edit -
It's really, really easy to see that a transaction on Ethereum is not even remotely worth the gas it charges today. I remember hearing ETH people trashing BTC transaction prices in 2017, but yeah I'm sorry, this is so beyond absurd I cannot support or recommend anyone use ETH as a layer 1 until it is actually a scalable chain. Not in theory, but actually works. Wasn't sharding and layering discussed in 2017? How much longer until it's actually usable? Gas price for minting a JPG the other day for me would have been $300. This isn't worth it in any world unless you are sitting on a fat stack of ETH you bought under $200. But then you should just sell it instead of actually using it. Don't you see the problem? Why do you think there's so many articles talking about how terrible Web3 is? It couldn't possibly be that people's first impression of the tech is on a financially impractical chain.
I like working in Solidity and think the EVM is great, and there's a lot of cool projects in the Ethereum ecosystem. But ETH is an unusable L1 for the vast majority of people until they solve scalability. No amount of decentralization dreams are worth it. Hell, you could even just use Ethereum classic if you wanted. It does everything ETH does because it's just ETH except they didn't have a centralized Ethereum foundation mutate the chain history because someone stole a bunch of money from them and only costs like $50 the last time I checked. If you care so much about decentralization shouldn't you like the chain that didn't have it's history changed by a centralized organization?
If you really want the most decentralized network possible, Bitcoin is it. I haven't looked into the taproot update too much yet, but maybe it'll be actually supported before ETH scales at this rate.
You should really do more research because that's not how it'll work.
The idea is that users will onboard straight to Layer 2 and stay on Layer 2. Layer 1 will only be used by protocols and extremely important transactions like nation-state transactions. You'll also be able to move between L2's via bridging protocols like Hop.
This isn't just Ethereum BTW. Other chains are moving to layer 2 rollups because that's just how blockchains scale. Ethereum is getting a lot of shit because it's dealing with unprecedented demand and it refuses to cut corners on important things like decentralization. Other chains will have the same fate if they grow large enough.
I'm simply stating how Arbitrum works today. And sure, once there's more adoption on L2s then there will be a reason to stay in the ecosystem, and I do get that it's inevitable that we'll have a multichain future (we have a multichain present anyways), but in this model I just don't understand why ETH has value in the thousands of dollars per token. The answer is simply amounting to "you cannot afford our chain so go use a different one". So I'll happily work with a more affordable chain with higher throughput.
I hope that the ETH vision works out because right now it's kind of a clusterfuck tbh. But until the planned vision is not theory and is fully realized, I think it's absurd to refuse to work with other L1 solutions like Solana simply because Ethereum has a large head start on decentralization. I think that if people try some Web3 apps on a chain like Solana or Avalanche, more people would be excited about the potential that Web3 can bring. Instead, we have people blindly yelling about how NFTs are bad for the environment or whatever nonsense, or that it cost someone $100 to move $50.
And regarding using ETH for nation state transactions, you can simply just use BTC for such important transactions. It's more decentralized than Ethereum and is just going to continue to decentralize.
Edit - my bad, seems like the week wait is from Arbitrum to ETH. Evidently missed that when I was trying to move funds from ETH to Arb. Ah well.
Really though, unless these transactions become more obfuscated crosschain this ETH ecosystem feels like an over engineered nightmare on a chain that couldn't scale. I keep hearing from ETH maximalists like you that this is the only way, while hearing it does not have to be this way from your direct competitors.
Take Solana for example. It takes a powerful computer with 128gb+ of RAM just to run a Solana node. You can run the ETH software on a raspberry pi.
High hardware requirements means fewer people can afford to join the network. This makes Solana more centralized. They also do some sketchy things. For example, in proof-of-stake algorithms the nodes vote on the next block. Solana counts votes as transactions which inflate their transactions-per-second numbers.
The Solana network has also been taken down by a software bug. This is much less likely to happen with Ethereum since there are multiple, independent development teams writing Ethereum client software. A bug in one client will only take down part of the network but not the whole thing.
Let's take another popular competitor Algorand. With Algorand they have two types of nodes relay and participant. The relay nodes take care of consensus. However, you have to send in an application to the Algorand foundation just to be allowed to run a node. There is not a lot of info on relay nodes but apparently the harware requirements are non-trivial.
Cardano I don't know as much about. However, there has been some debate over whether it's PoS algorithm is too similar to DPoS with similar vulnerabilities. Also, the founder of Cardano, Charles Hoskinson, is a known psycho and liar. This isn't just my opinion, just google him.
Polkadot has parachains which is kinda like sharding. However people are also developing Layer 2 rollups for polkadot. This helps prove my point that layer 2 isn't just an ethereum thing.
I don't really have issues with Bitcoin on a technical level, although I think they are too slow to change and adapt. Bitcoin also has multi-dollar transaction fees just like Ethereum which helps prove my point. They are also looking into layer 2 with the lightning network which, again, helps prove my point.
Overall, I really don't see any compelling alternative to what Ethereum is doing. Other chains are starting to look into similar Layer 2 solutions. Other chains are cutting corners to boost their transaction-per-second numbers. And other chains are run by questionable folks.
Thanks for writing up these viewpoints of different chains. I haven't had the chance to check out Cardano, Algorand, or Polkadot, but in regards to the downsides of Solana vs Ethereum, I'll state why I personally am choosing to create applications on Solana compared to something on the Ethereum ecosystem (despite me really liking the tooling that some projects like The Graph provide) -
I'm an applications developer - to me the most important things are lessened complexity, performance, and usability. You can certainly use chains like Polygon, which I might do in the future. However, from my viewpoint, the more complex the ecosystem becomes, the less likely it is to achieve widescale adoption unless there is a lot of masking of the underlying complexities. I've been interested in crypto for years, and been in the space as an engineer for about 6 months, and cannot keep up with how complex the Ethereum ecosystem has grown and how these chains scale. If I cannot keep up, there is no way I can expect for people who've never even touched crypto to be able to wrap their heads around it. I do know that there are efforts to mask crosschain EVM interactions, and personally haven't tried them out too much yet beyond standalone bridges like Synapse. If these projects work out and a year or two from now the ecosystem's complexities are masked, that is fantastic.
For me, I will happily take the tradeoff of making it more difficult / costly to become a validator (in the case of Solana), with the huge performance improvements it provides compared to EVM. While the cost of hardware does mean it is more centralized to entities that can afford to run a Solana validator, to me it is not a concern. It's still decentralized, albeit not as much as Ethereum. I was skeptical of Solana at first until I used it as an end user and am quite happy with the experience, there's a gigantic difference between a 1-5 second transaction time vs 30s - 1 minute (or higher, if you submit a transaction while there's a sudden dip in gas price). I've had transactions stuck on ethereum for an hour and a half because the gas price metamask suggested was too low, there was a 5 minute window I submitted my transaction where the average gas price was super low. Same with Polygon, I've had a transaction stuck in a processing queue for half an hour.
These interactions to me have driven me to look into non-EVM solutions because it truly leaves a bad taste to have to wait helplessly on ETH to process these transactions. Hence, Solana's throughput and promises that they will not need to rely on L2 solutions to achieve scalability (whether that is true is to be tested by time I suppose) are incredibly attractive. It being down for a day was bad, yes, but the mainnet has only been live since last year and is still in beta, and has only happened once to my knowledge. I will still take that downtime given the incredible performance the chain provides. And if it is true that Solana will not require L2 solutions to scale in the same way ETH has, then it's even more attractive to me as an app dev. I think it's likely to be a lot easier to convince the average person to use a platform like this, compared to a complex ecosystem which is multichain only to allow for scalability.
I definitely understand that to a lot of people, decentralization in ETH is the number one driver. However, I do want to emphasize there are certainly reasons to use a chain like Solana, despite having a lessened degree of decentralization.
There are I/O functions - oracles like Chainlink which put real-world data on the Blockchain. Those can also be further decentralized or at minimum used only for services where you have to trust a centralized entity without having to exit the Blockchain just for that. Those already enable me to e.g. quickly bet on TSLA via synths with money I have in crypto without cashing out and going through a broker.
>(2) has enormous costs associated with even the most basic of computations.
On one of the chains (Ethereum) but there's plenty of other popular chains with much lower costs.
tell us something we didnt already know. you can solve the speed problem by using solana or literally any of the other 100 coins that claim to be fast, or eth2 in six months
i am not even a person who is a fan of blockchains (since they are mostly poorly designed, unfounded, etc)
Algorand also uses Proof of Stake, is much faster than ETH, and supports smart contracts. MSM won't write about it for the same reasons they won't write about a large AWS outage but they _will_ write about a Facebook outage. It's not a conspiracy; it's just not interesting to laypeople yet. The shitshow of art NFTs make for good press.
Which claim? The meme that transaction throughput is inherently low in crypto is falsified via solana (as mentioned) or avalanche. Bitcoin will likely always be low TPS. Ethereum 2 maybe will eventually ship.
I find both the evangelism of and the hostility towards “Web 3” kind of silly. Obviously there’s some amount of interesting stuff and obviously there’s some amount of tech bro assholes getting rich who “shouldn’t”.
Just like ~2008-2012, ~1999-2002, ~1994-1996, ~1982-1986, etc.
On the technology side: distributed Byzantine consensus is an open problem with some promising prototypes. It would have very cool use cases: remittance is huge, ENS is fucking cool, Brave/BAT is cool, NFTs for e.g. concert tickets or restaurant reservations or whatever would be cool, IPFS is cool.
The technology isn’t there yet. POW doesn’t scale. Ouroboros Praus/Genesis needs a clock oracle (see: Spanner), Tendermint/Algorand/PBFT are too slow (global 3-phase. commit, right). Solana/ICON/etc. are expensive cloud databases. L2 rollups/Lightning/sharding are “kick-the-can” exercises. But it took time to go from the Paxos paper to Chubby as well, maybe someone solves it.
Yeah, it’s mostly scams today. But it’s always been mostly scams. Microsoft bundling IE was a scam. Pets.com was a scam. Path was a scam. Uber and AirBnB were (are?) illegal as hell. Third-party cookies powering Google and FB is a scam.
When the dust settles some amount of this stuff will have been worked out technically, legally, and financially, and the rest will be “lol do you remember when…”.
This time some people will be rich who neither had rich parents nor knew Bay Area royalty, but YC wasn’t always part of the machine either. I’m sure Goldman and YC will eventually embrace those people with open arms.
I for one look forward to us collectively getting our knickers untwisted about it so we can go back to rewriting every calculator app on earth in Rust (I kid! Don’t hit me! Doofy Haskell is better than no Haskell!).
This is the best take I've seen on HN. It's unfair to judge tech by its scummiest users, just as it is unfair to present future potential as if it's already here. There is remarkable amount of technological innovation being created, if you care to dig deep.
I think Web3 will be a thing… we just don't know what and how exactly. It's like going to a very misty field, hoping to find something there. We'll find _something_.
I agree. I think there is something here, it is just not what proponents are currently saying it is going to be. I think we are clearly still in a protracted “hype cycle” for BTC/ETH/DAO/Web3.0, just like the early internet was as well. We have yet to hit the “trough of disillusionment” that all technologies go through. Some tech dies when it hits the trough, but most go on quietly producing value in subtle ways after they get through the trough.
Just about all cryptocurrencies are built on top of 'number go up' deflationary FOMO token-omics. New buyers are buying from older buyers. The older buyers are the fools that are looking for greater fools.
But as you say, one day there might actually be real value here. But here's the rub, this is all decentralized, and thus anyone at any time can create their own chain, and many have already done so. And these technologies might just not need blockchain at all, for instance IPFS looks likely to lose to Torrents.
So why would I buy a piece of an existing chain, when I can just wait for the technology to be created and spin it off on a new chain, for a price of $nearly_free instead of $massive? This is not the same as investing in Google or Amazon in 1999. If I am buying into the coin for the utility and not for the hype, I would never touch a mainstream coin. If a AAA game were to create their own NFTs, they would do so on their own chain. I would generate my own chain to confirm my own identity.
No coin that currently exists has a long-term value above $0.
You've definitely got a point, but I think you might be oversimplifying a little in some places and maybe missing the bigger picture in some important ways.
There is clearly an asset bubble in cryptocurrencies. But I'm borderline weirded out by how singled-out the crypto asset bubble is compared to say, the US equities asset bubble, or residential real-estate asset bubble, or any of the other places that we're warehousing major currencies inflation. It doesn't really matter if you look at `SPY`, or the Qs, or just one of the FAANGs: from right before the COVID overreaction to the present day a dollar (which hasn't really slipped all that badly against any of its easing-addled peers) buys you about half the amount of Big Tech as it did on Jan 1 2020. Nothing Earth-shattering has happened to the business models or 5-year outlooks of any of these companies. The smartphone market is every bit as saturated as it was 2 years ago. The FB/IG feed ad load is no less maxed out, Waymo isn't running 10MM pilot level 5 autonomous taxi rides across 50 cities in 20 countries, and Elon Musk sure as hell hasn't colonized Mars (at least his stated ambition justifies a PE ratio in the hundreds: he's on record that he's trying to own a planet).
So I'd argue that Apple stock hasn't 2-3x increased in the last 2 years in any other way than dollar-denominated.
I'm the last person to try to sell you a cryptocurrency token, I don't give a shit what the price of ETH is. But just because Gamestonk or `ETH` is the lottery ticket available to people who don't know a guy who knows a guy who knows Ron Conway doesn't mean that going to school, working hard, and saving a quarter of every paycheck is going to get you anywhere in a casino economy where the CPI doesn't seem to move with the cost of healthcare or education or any of the shit that's really eating the working person alive (at least in the US).
`BTC` and `ETH` may turn out to be worthless tulip bulbs, it's not even all that unlikely from a Bayesian standpoint, but the pervasive implication that the `/r/crypto` people are at a casino and the A16Z people aren't is absurd. The A16Z people can just afford to lose a hand or two, and the `/r/crypto` people have nothing to lose.
DISCLAIMER: I'm happy to be educated if I've got this wrong. I'm extremely sensitive to the fact that this is complicated, changing really fast, and I could easily be fully full of shit.
But as far as I understand it's all some variation on "we're going to anchor something on the slow, expensive, trustworthy chain that represents a promise that we're going to settle stuff over here and report back to the big, slow, expensive but trusted chain".
Often that anchor is some variation of a multi-sig custodial wallet with a bunch of blockchain bigshots on it, i.e. a fucking bank. If people want to evade banking regulations that's their business, but calling it cryptographic novelty is stupid.
Sometimes it's "we're going to settle transactions on some shard, so it doesn't matter that it's somewhere between a slow wristwatch and a fast potato in terms of throughput", in which case the people I want to transact with need to participate in that shard, in which case you've got Metcalfe's Law working against you: you're on the wrong side of the polynomial. I want to buy some shit from merchant $FOO but they're not on my shard. Damn, guess I need to route some $COIN up through the real chain and down to the shard where my pot dealer is.
The point is that if the thing you were deferring the transaction onto was both trustworthy and scalable, then you'd just use that. It's this non-terminating recursion where each invocation of the Y-combinator kicks off a fat token offering. Which is why the Lightening whitepaper is now $ZILLION pages long when it started at 18: every hole they patch creates 3 more.
IO-HK is somewhere south of RenTech and somewhere north of NASA in terms of the Nobel laureates they've got working on Ouroboros [BFT|Praus|Genesis]? and they can't get it to work: ADA is getting pushed around a warmed-over Tendermint still (really fast potato).
The ParityTech people seem to have learned the hard way that Google barely made it fly with friggin cesium clocks and satellites in a non-Byzantine setting when they put together BABE [BADASS|SASAFRASS|WHATEVER]? and slapped GRANDPA on it. Ethereum v2 gets delayed with roughly the same cadence as viable fusion power (but Casper the FFG!).
If someone knows how to do a chain that's truly secure, truly decentralized, and doesn't cost $500 to buy a $5 ENS domain then I missed that paper.
If you know of a project that actually works I want in on the governance token. It'll make BTC look like a victim of hyperinflation.
You often see advocates of decentralization hail networks for being pro-immutability, battling censorship.
How does it deal with data you absolutely do _NOT_ want to be shared and propagated around? I'm talking about things like CP, terrorist media, fake news, scams/frauds, and what not.
Crypto proponents are in favor of there being no technical restrictions that prevent such content being posted.
An interesting possibility is that illegal content gets permanently inserted into a blockchain, which could make running, for example, an ethereum node very illegal.
> An interesting possibility is that illegal content gets permanently inserted into a blockchain, which could make running, for example, an ethereum node very illegal.
I've heard this called a "pee in the pool attack."
Block chains like Ethereum and Bitcoin have one intrinsic defense: they don't support very large data objects. So that makes inserting CP problematic. But someone determined enough and willing to spend money could insert a really horrible image as a series of transactions.
At that point you'd need additional data (which transactions) and software in order to stitch things back together, at which point is it the (disjointed, seemingly random) data that's illegal, or the instruction set that allows you to assemble it into something illegal?
has there been a documented case of this happening yet? one would think that there must have been, at some point, by now. but then I suppose if someone were to make a program that accesses intentionally-inserted distributed immutable data in a blockchain and reconstructs an illegal file (probably an image), then I suppose that executable or source repository itself would then be taken down by authorities and its author(s) prosecuted. but to my knowledge, this hasn't actually happened yet...
You don’t need a program to do that, you can easily embed a BMP or an SVG without a complex executable needed to decode the image heck even for more complex file format a BASE64 decoder can do that.
Also if say CP is currently distributed through compressed archives even if they are PW protected it’s not like that 7zip then somehow becomes the illicit material. If you host the archive you are on the hook of distributing CP even if it’s encrypted…
At least for Bitcoin, there's another defense: what the blockchain actually stores on each block is the root of a Merkle tree which has the transactions as leaves. It's possible to discard unwanted transactions, and that only loses the ability of verifying newer transactions which chain to these discarded transactions. (AFAIK, the original intention was that most nodes would discard old "spent" transactions, to reduce the size of their local database.)
How do you verify new transactions without checking every single past transaction? As far as I understand, you need to know the current balance of every wallet in order to prevent double-spending.
> Crypto proponents are in favor of there being no technical restrictions that prevent such content being posted
This is precisely why they'll fail (aside from technological issues): the rank and file person on the internet does NOT want a Wild West when they go to visit a news feed. Hell, the average person doesn't even really like curated content. They want a chronological list of things they decide to be relevant and nothing else. Just look at all the complaining every time Instatwitter changes an algorithm and hides the method for sorting by most recent.
And what they don't know yet is that all these big companies, if they use this technology, they're going to use them in very focused ways to reward people and prevent them from abandoning their platforms. Because "free" has many meanings, but none of them are inherently exclusionary from corporate competition.
For example, IPFS "solves" this by allowing requests for takedowns per gateway. The upside of IPFS is that you can go after every host, the downside is that everyone knows what content you visit. The network still propagates the illegal content, so you end up with a witch hunt.
It's probably a good thing paedophiles haven't widely discovered IPFS+TOR.
The “witch hunt” aspect is no different than BitTorrent, right? Or even just people repeatedly uploading the same content to various online hosts and sharing links via any channel whatsoever.
IPFS would make it easier to identify non-modified content hosts since the hash is always consistent. It's far easier to bury something using standard HTTP or HTTPS or even FTP.
You know how most web2 sites never delete data, but just flag it as hidden? The web3 argument is to create systems whereby this is the norm, when one chooses, with the lowest layer being durable and immutable, but a variety of higher level layers (some centralized) having the freedom to mask that data when they choose.
Ultimately, the relevant question is if the root layer of open data systems should allow erasure. There are good arguments to be had on both sides. If you feel that if we don’t have systems that are fundamentally censorproof, the net result will be an eventual all consuming global censorship regime in the limit given enough time, then there is little choice, however.
Practices may vary by organisation and type of removal requests, but the claim that no removals occurs is absolutely false.
For legally-proscribed content, platforms will go to extraordinary lengths to remove not only the backing store but all possible CDN copies of content. This can ammount to millions or billions of items of content (multiple sizes and versions, replicated across multiple geographic locations).
Other instances in which UGC / USC (user generated/supplied content) have been removed are quite public, as with Google's shutdown and data deletion of its Google+ social network.
A great theory but in practice in this specific case the legal system will be forced to capitulate. Either a country has to ban all crypto mining or not enforce GDPR on chain nodes. Seems obvious which way it will land in the long run.
Unless much more energy-efficient methods are developed, it seems in the long term crypto mining is going to be banned almost everywhere. The alternative would be cooking the planet.
Perhaps this problem can be solved somehow, but the alternatives have their problems.
In many countries, it is possible to force ISPs to block content - and in the end, I guess it's easier for ISPs to simply not offer you their service, than face gov. mandated fines.
It's a bit like cryptocurrencies and banks. Because it becomes such a big burden for banks (to prove that the money obtained by selling crypto is not related to funding terrorism, crime, etc.), many banks simply refuse service to customers dealing with crypto. Either closing accounts, freezing money, or whatever.
If you view 'decentralization' as a bucket of technologies underpinned by cryptographic primitives and blockchains, it doesn't.
This is similar to other technologies like cash, paper, and computers* which also don't, as technological phenomena, implicitly include censorship as a feature.
*it looks like consumer computing is moving away from general 'free' computing to ASICs from folks like Apple which likely will include built-in censorship features moving forward.
How are they dealt with today? I haven't followed the blockchain tend, but IIRC there were programs that could encode arbitrary data into the blockchain history. What happens if someone puts CP in there?
before the internet, the police would find you and put you in jail.
Why is it normalized that all our communications are bugged and analyzed? This is not something that people should expect if there is going to be correspondence between the physical and the virtual world.
> How does it deal with data you absolutely do _NOT_ want to be shared and propagated around?
That is censorship. The correct answer is you don't. When you obscure evil, it propagates. When you shine a light on it, it disinfects. Awareness of the thing leads to discernment of the thing. Unless you think people are default evil, bad ideas will stay bad ideas without an intermediary forcing their will upon them.
That is an incredibly naive view of the world. Just look at all the disinformation rampant on Facebook and the antivax hellscape we now live in. You can't possibly look at that and think things got "disinfected" through awareness.
> Unless you think people are default evil, bad ideas will stay bad ideas without an intermediary forcing their will upon them.
This is also not correct. People aren't neccessarily evil by default, but they are stupid and easily manipulable. Just look at QAnon for another example.
It also misses the point for a large class of data relevant to individual safety - if GP gets associated (truly or falsely) with [outrage of the week] and his buddy from HS recognizes the username, what happens when said buddy posts his address (or his kid's school address?) to an immutable data store. GP is a monster and the law isn't doing anything, we gotta take matters into our own hands!
There's a lot of things this misses. It also completely misses the point on stuff like CP.
I know CP is bad and I have no interest in seeing it. However, I do also know that there is a group of people out there that do want to see it. Is the "anti-censorship" approach to just "shine a light on it" and let those people watch CP that's on the immutable data store?
This whole post doesn't just assume that people are by default good, it assumes that there are no bad people. That's the only scenario in which the proposed "solution" would work. Personally, that's not a bet I'm willing to make, or even entertain.
Right. If you can see it, you can catch it. If you push them further and further into obscurity, you're less likely to catch it. You're increasing the chances that it happens by censoring it, not reducing the chances.
It's not only you that can catch it. It's all other people too. Yes, you decrease your chance to shut down one individual perpetrator, but you also limit that one perpetrator's reach and they can't do as much harm.
It's the same thing as any other infectious disease, really. If you don't do any covid prevention and hang out with a bunch of unvaccinated people in close quarters, you're more likely to find out if somebody had covid, but at the cost of potentially infecting everyone.
This is about reducing harm by reducing infections.
Your argument boils down to "oh well, now there's CP forever accessible because its on this immutable data store, but at least we now know that somebody wanted to post CP".
> This is about reducing harm by reducing infections.
That doesn't make any sense for CP. It's not like people who weren't into that crap before stumble upon it and are like "oh, now this is MY THING."
What I'd propose is having a "known bad content" (as flagged by users/operators) list that gives node operators a rating they can filter what they propagate by.
For example: if you have A, B, C, and D ratings (A being harmless, D being CP), you'd get a self-policing network because node operators could say "I only host/seed B+ content." Very few people given the choice would even want to seed D-rated content (and if I'm wrong, then we have a much bigger problem at a societal level).
It'd be imperfect, but so is blatant censorship. Arguably this approach would help you to find the worst stuff fastest.
It's not about making people pedophiles, it's about giving existing pedophiles material. Or about exposing people with right-leaning views to more and more extreme content, or whatever the dangerous material in question is.
What you are proposing is just censorship with extra steps, it seems to me, where the operators are the censors. What's the point, other than making everything more complicated and difficult to work with?
In essence. Except it's by consensus, not by decree. That's my personal issue with censorship. One or a few people deciding "this is bad," which starts out with good intentions eventually gets abused and used to subjugate groups of people. In this design, it's voluntary. You can be on the network, but that doesn't mean your stuff will be propagated.
Consensus over who censors what is established at election time, by people voting for the party representing their views. No need for overengineered schemes.
It's not. When you silence ignorant people, they get more radical and more willing to do things they otherwise wouldn't because they no longer have an outlet. Silencing a neo nazi forum increases the likelihood for "those f'ing j*s shut us down, let's get em!" behavior. And even if that didn't happen, it's far easier for law enforcement to surveil people planning violence if it's out in the open.
> Just look at QAnon for another example.
I know multiple people who went down this rabbit hole (one of them is still down it). And what I said above applied exactly when they started getting booted off social networks. Before then there was no plotting or aggressive stance. They just thought they were "on to something."
> The root node [under which all ENS domains are registered] is presently owned by a multisig contract, with keys held by trustworthy individuals in the Ethereum community.
For what it's worth, this is changing as we speak. ENS recently had a very successful launch of a DAO [1] which will soon be in control of these contracts, therefore making it fully decentralized. It's also already impossible for anyone (not even the root holder, be it mult-sig or DAO) to revoke your ENS registration.
Also, NBA Top Shot is a very cherry-picked example. I'm not even sure I'd classify those as NFTs right now, given they are completely separated from the broader ecosystem and not yet interoperable at all.
I have some Top Shot moments, and I don't think of them as NFTs at all. As long as it's locked down on one platform, to me it's not an NFT. The get rich hype seems to be at an ebb with them right now, so I can just play around and collect. It's fun, but it's not an NFT.
So far it's a case where I don't think the blockchain is adding any value whatsoever. Blockchain is just a poor fit if you're going to keep it locked down to one administrator.
I'm disappointed the author glazed over flash loans since it's such a perfect example of something that did't exist previously. The things that "make you dizzy for free" are the things to pay attention to. In crypto I can borrow effectively limitless money _uncollateralized_ if I pay it back within an atomic transaction. Why is that interesting? It's because it's not something that was ever possible before and there's no telling what it will enable. The lowest hanging fruit is stuff like arbitrage where you can now effectively operate without capital constraints but there will assuredly be more interesting uses discovered. Even ignoring the specifics of flash loans, the ability to compose financial primitives into atomic transactions is new.
I think the problem with the current state of Web3 is that it really doesn't seem to solve meaningful, mainstream problems yet.
Even the most widely accepted use case which is crypto-currency fails to break out of the theoretical value outlined in the different white papers. I own several crypto-currencies and there hasn't been a single moment in which I thought of buying something with a crypto-currency. I have crypto-currencies because I'm speculating in their asset class value, not necessarily because I'm betting on their utility.
Now, I know that crypto coins are indeed used in real service/product transactions, but I think there's a difference between the present economical use of cryptos and its potential mainstream use where cryptos can effectively replace fiat currencies in super wide economic settings.
I believe that Web3 would happen but I honestly can't see a clear trajectory for Cryptos, NFTs, DAOs etc to become effective instruments that can replace existing Web2 instruments.
In fact the reason why everything in Web3 feels like BS right now is because everything in this space uses Web2 distribution. People promoting NFTs on Twitter feels a little bit like someone faxing you a webpage. Owning the rights to a random JPEG is something that feels too abstracted from the present Web2 mental model and value proposition.
>I own several crypto-currencies and there hasn't been a single moment in which I thought of buying something with a crypto-currency.
This is entirely personal and subjective, but I prefer the user experience of Aave and Yearn to traditional banking with e.g. Chase. I also would way rather make large purchases with crypto (e.g. down payment on a house) compared with wiring money.
The person you replied to said “crypto” not “Bitcoin”. They can convert their coins to an algorithmic stablecoin and make the payment in a single transaction with no price change.
I mean there’s very little you’ll find as an official spokesperson for Bitcoin but yeah, the dream of on-chain transactions being used for anything other than a funny speculative asset is pretty much gone.
It’s actually kinda crazy in a “voting yourself money” kinda way. Because as long as people believe that BTC should always increase in value then in the long run the returns should gravitate toward something like the weighted average worldwide inflation rate.
The downside of course is that unlike normal investments they don’t spur the real life economic growth necessary to sustain that inflation.
For many years now Bitcoin has been generally viewed by a large consensus to be a low throughput store of value, akin to digital gold. Many disagree with this ofc but it is a pretty mainstream view.
If you cannot use Bitcoin to quickly pay for your groceries at your local supermarket then it is quite useless to use isn't it?
There are other cryptocurrencies which are more suitable to these very basic use-cases hence why Bitcoin is the easiest cryptocurrency to attack for most critics.
Who are you looking to "officially" decide that? Best you can probably do is look at what hard forks have occurred (such as bitcoin vs bitcash in this case) to see community splits.
Trying to pay in Bitcoin or any other non-stable crypto asset sounds like a nightmare. I think that people rightfully don't do this anymore but instead use stable coins like USDC (https://www.circle.com/en/usdc).
Well, no, because the value would flail around wildly. No sane person would do that. BTC crashes 10% in minutes, who would knowingly expose themselves to that kind of forex risk for the few hours it takes to get the confirmations needed to feel comfortable? When one could instead liquidate their position in seconds, confirm the amount, and wire it to their recipient - free of charge often. Domestic wires are free on FTX but sending USDC-ETH to your own wallet costs $25. There's literally zero good reason for doing what you suggest.
I'm not OP but I had to wire money earlier this year when I bought a house. To accomplish this, I had to drive to my nearest bank branch (1 hour drive), talk to a bank teller for 15 minutes while she filled out forms and printed out papers I had to sign, and then they told me the wire would probably arrive in time for the house signing (3 hours later). This was to send ~$15k. Compare this to sending USDC on [smart contract enabled blockchain] which takes a few clicks and minutes at most.
For arguments sake I will point out the downsides to using crypto in this case:
1. Most people don't want to manage their own wallet
2. USDC is centralized so there is some amount of risk
3. If you send it to the wrong wallet, RIP to your money
FWIW, I was just as scared of sending the wire transfer to the wrong place as I was when I send crypto. And with crypto you can quickly send a small test amount first. You can use something like DAI which is less centralized than USDC if that risk is a concern. Wallet UX will improve over time
People are probably tired of hearing this, but this is not a problem with wiring, it's a problem with US banks.
When i bought my home in the UK six years ago, i phoned my bank, told them how much i wanted to send and to who, and they did it, with the money arriving straight away. If the amount had been less than 20k, i could have done it online rather than over the phone; the back-end payment machinery is the same, but i suppose the bank think there's less chance of a normal customer making a mistake with a large transfer if someone walks them through it. My bank is rather old-fashioned; more modern banks let you make large transfers online or through their app:
That page mentions that "one of our team members may need to double check a few details before the payment can be made" - again, that's nothing to do with the machinery, that's in case you match some pattern looking for fraud or money laundering etc.
> People are probably tired of hearing this, but this is not a problem with wiring, it's a problem with US banks.
I have a US bank and I can send wires online. It's really not uncommon. I don't understand how or why the OP is banking with an outdated bank an hour away from his house when there are good options that can be accessed entirely online.
There are a lot of behind-the-times banks in the US, though. If you're stuck in one, considering switching.
Banking in Australia with ING I could simply call them up and have the limit raised for a one time payment such as a house deposit which can then be completed online.
> I'm not OP but I had to wire money earlier this year when I bought a house. To accomplish this, I had to drive to my nearest bank branch (1 hour drive), talk to a bank teller for 15 minutes while she filled out forms and printed out papers I had to sign, and then they told me the wire would probably arrive in time for the house signing (3 hours later). This was to send ~$15k. Compare this to sending USDC on [smart contract enabled blockchain] which takes a few clicks and minutes at most.
You really need to switch to a modern bank that doesn't force you to go in person to do a wire. That's insanity.
> For arguments sake I will point out the downsides to using crypto in this case:
Which are all reasons why someone makes you drive to the nearest bank.
As others have pointed out, these issues are highly US centric, as sending money in the UK/EU can be done almost instantaneously. And so, if they can be done almost instantaneously in other countries it means the technology is not the barrier, but the politics. Thus crypto's only advantage is not a technology one, but a political/market/bureaucratic one.
One good thing about crypto is that if it does take off and becomes a legitimate threat to wire transfers, then banks will change their tune VERY quick, and then once that system is in place then we can have all of the nice things that help protect your money in a US bank accountant (FDIC insurance, access to financing, fraud protection, etc.) with the advantages of crypto.
There is a reason the Winkelvoss twins store their crypto wallet pass-phrases in bank vaults.
For the record - I have my own thoughts about how bad the US finance system is, but I think crypto advocates love to ignore why these systems exist in the first place.
You are just using a bad bank. The bank I use lets you initiate a wire via their iPhone app, and then they simply call to confirm security details etc.
Far easier and safer than anything crypto has to offer.
Not to mention that it’s a complete fantasy to expect all but the tiniest number of sellers to accept crypto today, so the comparison is between something that exists today and works very well, and something that is only imaginary.
The bank I use is PNC, looks like it is currently the 7th largest bank in the US. To be fair, in the past month they opened a new branch which is a 10 minute drive, so that makes the first part a lot better. I am also lucky enough to live in a fairly high population area.
After seeing the other comments I guess this wire transfer issue is specific to the US. I agree that a tiny number of sellers would accept crypto payment today, but what do you mean exactly when you say it is "only imaginary"? Transferring USDC is very real and exists today. I don't expect the average person to ever transfer USDC the way it is done today, it would be a terrible user experience. But I'm trying to figure out the disconnect between what I see as a powerful financial primitive and what you see as imaginary
I left PNC when they started charging me $3 per check image viewed online through their web interface. I didn't believe it until the charges actually accumulated.
You might want to switch banks, I wire money a couple times a month, it takes about 5 minutes via their website, it goes out very soon after initiation (if it’s within business hours).
That’s a failing of the US banking system, but not of banking systems everywhere. In the UK you can send up to £250,000 within 15 minutes, and you can generally do this online.
Wires are often free. My bank (HSBC) charges me nothing for domestic wires, my brokerage (IBKR) charges me nothing for domestic wires, Schwab charges nothing for domestic wires, neither does Fidelity, USAA or Ally - even FTX charges nothing for domestic wires - even though moving USDC-ETH out of FTX and into your wallet costs $25.
Do you have a citation for this? The articles I found online suggest fees are almost universal, with only a single bank (Fidelity) offering true $0 wire transfer fees to all customers [0].
Here's references, although it looks like Ally and USAA have started charging fees since I looked.
HSBC offer free wires for Premier customers. [1]
IBKR offers the first domestic wire per month free, subsequent $10. [2]
Schwab also offers 1 free per month for qualified customers. [3]
Fidelity offers free wires. [4]
FTX offers free wires ("We are not currently charging for wire deposits or withdrawals.") [5]
Chase Premier Plus and Sapphire checking do not charge wire fees. [6]
TD Bank offers 1 free wire transfer per statement cycle. [7]
Citigold accounts offer free wires. [8]
CIT Bank depending on balance. [9]
They're not always free, to be sure - most of the low-end accounts charge for them, but then, those low-end accounts charge for practically everything. That said, TD Bank, Fidelity, Schwab, IBKR all offer at least 1 free wire per month for all customers.
If you have any meaningful balances or monthly income, you shouldn't ever pay for wires. Every retail bank offers free wires for qualifying customers to the best of my knowledge.
OpenSea is an online market for digital goods. A majority of the prices are denominated in cryptocurrencies (ie an item is priced at 1 ETH). As measured in USD, OpenSea did 8% of Amazon's volume in a month.
Off-ramping is a non-issue. It's like saying the stock market is worthless because its value is predicated upon keeping capital tied into it. Really, you can extend the same reasoning to any market. It's fine being a nihilist, but not very realistic.
It is. The moment any of those fictional tokens are used for anything other than meaningless exchanges with other fictional tokens, they are worthless. For now they are only perpetuating their perceived self-worth.
> It's like saying the stock market is worthless
Stock market is almost entirely worthless. It's the same speculation not rooted in objective reality.
ah, nevermind. I had written a thoughtful reply to one of your other posts but it's clear the gap between us is bigger than can be solved in this medium.
If you (and other crypto peddlers) can't put your thoughts down in a coherent form that doesn't raise more questions than gives answers, no amount of talking will help.
I treat the underlying "currencies" (ETH, Avax, Sol, &c) as speculative assets and do actual payments and other financial transactions in USD pegged stable coins.
Not trying to be facetious — who lets you make a down payment with a check? I’ve worked with title companies (though only in 2 US states) and never seen a closing that wasn’t wire based.
With a _personal check_? Nobody I'm aware of, having done a good 10+ transactions myself.
But everybody is happy with a _cashier's check_. Admittedly you have to go physically get those, which kinda sucks. Or wire the money to the title company instead, which I personally prefer over carrying around a piece of paper worth $75k (or whatever).
True, but handing over a check in person ensures you “got the payment in” at a specific time if you’re trying to beat another buyer. But I guess you can do a wire transfer in person.
How much time does a transfer like that take for tens of thousands of dollars
Asking because I don't know, and because I suspect it takes longer than I'd like if I'm trying to get my payment in first to secure the item (like I have had to do when buying used cars from private parties.)
It depends on which chain you're using but somewhere between a few seconds (on Avalanche, Solana, and many other newer chains) and an hour (on Bitcoin, which is in my experience really not useful for anything).
Both parties have to be present in person and sign the documents in front of a notary that also collect copies of the checks emitted directly by the bank at the moment and write down their id number on the deeds
I never understood how a personal check could be secure. You can literally have them printed for you over the internet, and deposited via image. I just can't understand where the security comes from, it feels like a liability just having them.
Echoing GP, I also do not find sending crypto to be all that nerve wracking. I frankly find sending a wire to be a lot more stressful (since I understand it a lot less well).
Unlike with crypto where the money is always lost forever, mistakes with wires can usually be corrected. If you don’t understand Wires then you may be unaware of this.
My understanding was that wires were quite difficult to reverse, and it's ACH transfers that can be reversed.
Regardless, the reversibility aspect has both positives and negatives. It does allow you to reverse transactions, but with the added complexity of the transaction not really settling until after that reversibility period passes. If I receive a crypto transfer (ex: a stablecoin), I can know that the money is actually mine within a few minutes, and can't be taken back. There are major benefits to that.
The risk of the money being fraudulently taken back is close to zero. If you are worrying about that happening, then you are either a fraudster yourself, or just being paranoid. There is no major benefit to not having this.
On the other hand, if a crypto transaction has any errors, the money is instantly lost forever, and nobody can help you.
Your argument amounts to claiming you have a car that is impossible to steal, and yet becomes permanently inoperable if you press the wrong button on the dashboard.
Being able to recover stolen property is a good thing, you know?
There are no repayment terms per say, just interest charged on the loaned amount.
Aave has variable interest on stables that varies between 7-4% and they offer an incentive bonus of about 3% MATIC, making the effective rate 1-4%.
My loan to value rate is around 35%, which gives me a very healthy liquidation buffer in case the market gets even more volatile.
My collateral is mostly BTC and ETH, with smaller holding of MATIC and AVAX.
It’s a really nice system, I get to keep my crypto holdings and extract real world value. Paying 1% interest on a loan backed by assets that are appreciating 100% a year feels really good.
As an additional safety precaution I wrote a smart contract to liquidate some of my other positions if I am ever at risk of being liquidated by Aave to avoid the liquidation penalty.
Clarification for confused outsiders: crypto loans are over-collaterized using crypto assets. In case of non-payment, Aave won't come try to collect your house, instead they'll just keep some other crypto that you put up as collateral.
I said this in another comment on this post, but check out ENS. I’ve been a blockchain skeptic for a long time (and still am about art NFTs and most other things) but the idea of “SSO without a company attached” feels like something the mainstream public actually does want (think of all the negative public sentiment around big tech companies harvesting data and the grudging acceptance people have of their dependence on FB and Google for identity and easy sign-in). It’s also something that requires blockchain and can’t be done without a “decentralized consensus” about who owns what username (this is how you get around relying on a particular company). And ENS works now, it’s the kind of thing you could just go ahead and add to a web app you’re working on without having to wait for “the tech to arrive” or anything.
Again, I’m still skeptical about most of this stuff, but this one thing seems like a pretty good and somewhat practical idea.
And this is something that could power reversible transactions as well which I think is a current, but solvable problem of all crypto platforms.
What you are proposing is actually a lot better than the tech we have now. If I ever lose my Google login and their customer service does not want to deal with me then honestly, I'm not sure what I'd do. I'd rather trust my friends and family to help me out than FAANG.
That's honestly the worst solution I could think of, and not one I would ever want to rely on. Not for me, not for my family, certainly not for my parents.
>And if you're letting someone else store the key, then it's just another form of "Login with X".
Luckily there's a way to have other people store your key without the key ever technically existing outside your own computer - https://app.tor.us/, and using common web services (like email) to retrieve everything you need to construct the key in your browser whenever you need it. You can even use this to send money to a public key before its corresponding private key has ever been constructed by anyone! Meaning you can send money to someone who lacks a wallet by email, or by telegram, or by discord, or by reddit, or by anything, and they retrieve the money without anyone else ever seeing their keys or having to manage their keys themselves.
Well if you think this is bad, wait until you hear about MFA ;-)
On the real, I think there are people who will want to try this if it’s made easy enough. Some people could try getting a name and keeping a wallet through a 3rd party, in which case they’re no better or worse off than they are now. But at any moment, if they feel the need, they could transfer that username to a cold wallet if they want to take control of their security. Or transfer it back to the third party if they later decide that’s too much work.
The cool thing about this is that it’s another option out there and it offers flexibility. For the record, again, I’m not one of those people calling this a revolution or “the biggest thing since the invention of the web”. I just think this one idea is kind of neat.
Yeah much better to have it attached to phone number that can be sim swapped, biometric data that can be easily stolen, centralized user accounts, and my favorite national identity that you have no control over at all.
I think blockchain SSO could be cool, but do you really think "the mainstream public actually does want" this? The negative public sentiment of big tech is coming from news platforms. As far as I can tell, hundreds of millions of people (e.g. the mainstream public) are using TikTok, Instagram, Snap, etc every single day. I've also never heard of any significant negativity towards Gmail for SSO (aside from my nerd engineer friends, and even among them a minority).
Just took a look at ENS, within 5 mins I was able to find <pupular_first_name>.eth's first and last name, who they work for, their LinkedIN profile, their ETH address, how much they have in crypto holdings, what NFT's they buy/sell and full tx history... Who wants that?
Mozilla's Persona project solved federated ID for the Web pretty well, a decade ago. The problem is that a lot of the big tech companies want to completely own their relationships with their users. Google is never going to let you log in with something other than a Google ID, etc. There is no technical way to solve this problem.
Oh totally true, I’m not expecting them to. I just think this could be a way to pick some of the low hanging fruit: users who want easy sign-in on sites that don’t want to roll their own IDP. Right now that niche is filled with the multicolored array of “sign in with FB, Google, MS, GitHub, Steam, LinkedIn, Apple”. This would be a way to add an extra option of “sign in with ENS” that would offer the benefit of not including tracking or any association at all with a particular company.
Maybe not that many people would use it, but unlike a lot of other crypto stuff, this doesn’t require universal buy-in in order to be marginally useful to the people who do use it.
I mean, no, but they do let you sign in with a non Gmail address. (My @microsoft.com is a consumer Google account. Same way my @gmail personal email is a consumer Microsoft account.)
Means of contact end up being a pretty useful way of organizing identities (phone numbers have their issues) and having ways to fix mistakes. The one thing I haven't seen solved in web3 is communication to a user. Easy enough to encrypt messages in ipfs though, I suppose.
Client certificates have been a thing for years. They haven't caught on because the user experience is so terrible. ENS seems like client certificates with extra steps.
But, it is definitely a real use-case, so hats off to people for having a go at it!
If you want to trade easy of use against trust and security, you can use a browser extension like MetaMask that can hold your private key (or one of your private keys which you’ve chosen for this purpose) and perform the auth flow on sites that support this stuff. The UX is pretty smooth.
If you want more control, you can build one of these browsers or extensions from source and audit the code yourself. So you can choose your level of challenge/paranoia.
It's $5/yr in eth for the actual registration fee. The problem is that the transaction fee gas to register and maintain that registration is steep. So it's fairly common to register your ens for multiple years to save on gas. Once L2's/rollups are more mature and under community control, I expect ens to migrate to one and cut those transaction fees down substantially.
> And ENS works now, it’s the kind of thing you could just go ahead and add to a web app you’re working on without having to wait for “the tech to arrive” or anything.
What they don't tell you is that every single operation for every dApp on Ethereum, the gas fess make using this totally useless, which mean you have no choice but to tell others to wait for 'the gas fees to go down'. Rendering it useless.
Everyone knows that every operation is so expensive, that you cannot use Ethereum to pay for your groceries; making it totally useless in general since everyone needs to eat. Not even the other L2, ZK contraptions are ready or are even optimised enough to be useful so that isn't an option despite the hype around it.
Seems more like a centralised domain registrar contract having a sub-domain on .eth (collides with Ethiopia's three letter TLD) on an expensive blockchain controlled by so-called 'trusted' key-holders.
Quick sidenote - when signing in with ENS, you sign a message off chain using your private key, which they validate against your public key (your ENS domain is viewable onchain and does not require ETH gas fees to retrieve). So there's no additional cost incurred when signing in via ENS (besides the initial cost to purchase the domain + annual fees).
To your point about operations in general on Ethereum, yes, they are expensive, prohibitively so for the general population.
Even if nothing else pops out, it’s a huge error to point to illegal activity as some kind of bad, irrelevant use case. That smuggles in an assumption that lawbreakers are universally evil. There have been plenty of periods in history where those enforcing the law in a given country were the oppressors, and the resistant lawbreakers the innocent. It’s worth considering what the value proposition of crypto looks like if you were to find yourself living under an illegitimate authority. It may be marginal if the authority can stop it, but the more illegal activity we see in crypto the stronger the belief we should hold that it will be hard to suppress.
Because often the response to claims like the one I made is to just hand wave it away as some kind of Armageddon situation. But it doesn't have to be. The USSR and the modern day CCP operate in an environment where certain levels of criminality are virtuous, but things are not so draconian or suppressive as the environment you state.
If your government was cutting off access to internet over the possibility that people might use it to conduct their business in cryptocurrency, do you think local demand for crypto would increase or decrease?
The cable-cut might work for a while, but it wouldn't take too long for partition tolerant crypos emerge. You don't really need global consistency for most things, given that resources tend to be local.
As far as moving the bits around goes, I think that the scuttlebutt protocol handles it nicely. And if you look at the tokenomics of CirclesUBI there's nothing to prevent partition tolerance--you already have the restriction that tokens can only move across links in the web of trust, so you'd just have to add the additional restriction that the parties involved in a transitive-trust-transaction have to be contactable for verification at the time of the transaction. Although CirclesUBI runs on Ethereum (xdai) and would have to be ported to scuttlebutt.
The plan isn't fully fleshed out: you still need to incentivize running nodes and handle cases where bad behavior on the part of node maintainers becomes transparent so that users can revoke trust in them, but my point is that this is not some blind faith in the ability of the community to adapt, but rather something that I have diagrams on my whiteboard for.
I don't see any crypto zealot laying cables in the ocean to connect Europe and USA
do you really think the army would allow it?
but cutting cables is the nuclear option, I see much more probable that terrorists will try it in the future, because is such a fundamental weakness of the internet right now
Yes, but you generally can't build a business on top of an illegal industry that's closely scrutinized by law enforcement.
Already law enforcement agencies are campaigning hard against ransomware, and central banks and tax agencies investigating how people are using cryptocurrencies to launder money.
It doesn't mean it doesn't have value; it's just that the real expected value can't be expected to have legitimate businesses on top.
Certainly. But if one is going to argue about the value proposition of Web3, it may not be insane to postulate that in the future a large % of the world will live under regimes where the ability to interact with others illegally will be a strong value prop. (Not just financially, but in terms of speech, etc.)
They don't but that’s how people interpret NFTs. They think of NFTs as buying an asset that demonstrates authentic ownership of media.
NFTs conceptual value doesn’t map to anything that seems remotely valuable at present moment. There’s no mental model for owning this inmaterial thing that is pegged to a digital file that can be duplicated infinitely without your approval.
> There’s no mental model for owning this inmaterial thing that is pegged to a digital file that can be duplicated infinitely without your approval.
We have been dealing with this since the dawn of Napster. I'm pretty sure people understand ownership of digital creations and the ease with which they can be duplicated/pirated.
I think that just like Web 1 and 2, Web 3 is sorta an evolving term. Web 2 meant at different times and for different people a) web with user generated content (as opposed to admin generated), b) websites with AJAX requests, c) websites with glossy buttons and mirror effects.
Right now, the consensus seems to be that Web 3 is decentralized/blockchain stuff - but I also hear the Metaverse concept increasingly referred to as "Web 3"
I suppose my point is that the web doesn't develop along a linear, one dimensional scale, but rather a branching and recombining tree.
Web 2.0 was also supposed to be democratizing. Blogging, user participation. A web the dissolves the user/webmaster dichotomy. Less gatekeepers, barriers to entry, etc. Walled gardens, gatekeepers, centralization and monopoly hardening happened. They were never the stated ideal.
Just like web 2.0, web 3.0's idealistic description tends to to be the opposite of whatever 2.0's shortcomings are. Just like with 2.0, reality is likely to have its own say.
Commentators on crypto will simply have to get used to this - because it isn't an argument.
> For that same reason, I think people can genuinely believe they're obsessed with web3 because of its inherent interestingness when in fact it’s because web3 has made them a lot of money very quickly.
The nature of crypto-currencies means that you are free to invest in protocols you believe will make money - either by providing value or some other less rational reason for others to purchase. It seems like bloggers writing on the subject haven't yet conceded that being confused about this fact is not an argument for or against any protocol - a healthy review will ignore the fact so sensationally stated in many writings: "people shill their investments."
Would I review a Ford Motor Vehicle by closely examining how the CEO or marketing team behave, boldly discovering they don't have an incentive to be completely honest, and then assuming they are lying? No. I would ignore all of that and evaluate the vehicle itself.
Denouncing crypto-currencies or distributed-ledger technologies has always been the cool, contrarian thing to do on HackerNews (stay poor lmao) - and there is certainly plenty to criticize which is usually missed, because blog posts like this focus on the most surface level aspects of a topic. I'm sure plenty of people really want to learn about Web3, so imagine a curious, neutral reader's disappointment when they go to learn about what many present as a technological, general protocol through the lens of what licensed NFT's the NBA is shilling.
Every valuable new movement is going to have grifters. New movements without value will have grifters. There is one good reason HackerNews doesn't have anything positive to say about crytpo, and that is that with endorsement comes advertisement and shills - I only hope this place learns to talk in generalities about technology, protocols and economics rather than only doing the opposite of what attracts grifters (which is useful).
> Would I review a Ford Motor Vehicle by closely examining how the CEO or marketing team behave, boldly discovering they don't have an incentive to be completely honest, and then assuming they are lying? No. I would ignore all of that and evaluate the vehicle itself.
But that's not the case we're running into here. The crypto case is that you're reading reviews from people on the car, but turns out that a lot of people own Ford stock and therefore will probably have a positive bias (conscious or unconscious) for that car. It's not a reason against the technology, but it's a reason to be extra skeptical of the use cases and motivations of people who speak positively about it.
> I only hope this place learns to talk in generalities about technology, protocols and economics
There's quite a lot of talk about the technology, protocols and economics of crypto tech in HN. The issue is that when you poke around, people haven't actually thought about the use cases they present. Even the simple question "could this be done before and, if so, why isn't it done already?" already takes down a lot of crypto use cases and discussions I see around here. Game resales, multi-game items, digital art, defi loans, federated networks, global identity, consumer-backed media... A lot of people will say crypto can solve those problems without noticing that the problem wasn't the tech.
In the end, crypto just adds "distributed and trustless" to databases. Unless the problem being attacked is about centralization and trust (and for most big consumer markets, it almost never is) crypto can't change the situation.
> cool, contrarian thing to do on HackerNews (stay poor lmao)
See, this is the problem we're having. We can't really trust we're going to have a productive technical discussion with someone that sees crypto as a vessel to "get rich quick" and says things like that.
Probably both sides can convince themselves the tech does or doesn't totally obviously beyond a doubt work (to differing definitions of "work"). But predicting public adoption and widespread use (which makes most things more inherently useful too) isn't easy for anyone.
I have come to appreciate hacker news because of its (broadly) critical stance on crypto. Nobody can accuse this demographic as "not understanding" the math, which is a common bullying tactic in the crypto universe. Nobody can accuse this demographic as not interested in earning a living in technology either.
But the kind of digital universe we shape, the kind of behaviors being rewarded by the systems put in place, this seems to matter to a lot of smart people and that is quite promising.
I'm wondering how big your bias is since you are making money (I'm assuming) and how negative you will become about it when you and if you join those who lost money?
that Web2 VS Web3 schema pretty much summarize what's wrong with the new internet based on brand identities instead of technical merits.
A brief rebuttal:
- Twitter can censor any account or Tweet: yes, but Twitter is not the web, you can host your own tweets, even for free.
- Web3 tweets are better because decentralized: translations -> your thought are going to be forever visible to everybody and not even the author will be able to remove them. Of course any of those new shiny web3 logs can fail and everything can disappear with them.
- Payment services may decide to not allow payments: Web3 payments can do the same. There is nothing that forces me to accept a payment and if that was true, that would be a problem. I __do want__ to refuse payments from criminals and I do wanna know if someone is.
- servers for gig economy may go down. web3 servers can go down as well, they are made of hardware and maintained by people too.
If, for example, Uber can't keep their servers running despite their profits depend on them, imagine what would happen if Uber was running on someone else's node who DGAF if they lose money or not...
Now imagine what would happen to me, a completely unknown anonymous individual, with no power.
What happens if something goes wrong and "my income is affected"?
Who is responsible?
Who can I sue in case the SLA in the agreement haven't been guaranteed?
Will "the decentralized network of 1000s of computers" reimburse me?
If you create a "web3" website, it's up to you how decentralized you want that experience to be. You could have your content hosted on Filecoin, perform computation on ICP or Arweave, provide IPFS hashes to your users using open standards (HTML, JSON, Markdown, etc) with simple export functionality, open source code, ENS domain, etc.
If you take payments on your site via crypto, I'm not sure what you mean by "not accepting payments from criminals", as this is not a service provided by Visa or MasterCard either. I have a feeling running a criminal background check on all your users might impact your conversion rate, but you are as free to do that in Web3 as in Web2. (What are you selling that you would need to be concerned with such things anyways? If I'm selling an honest product or service, I don't care who buys it.)
There is no SLA. If you need an SLA you can create a hybrid site that both stores files in a central server and also backs them up to Filecoin or Arweave or Sia or Chia or whatever file network you like. But decentralization does tend to lend itself to resiliency, for example, Ethereum has 100% uptime over the past 6 years.
> If you create a "web3" website, it's up to you how decentralized you want that experience to be
> and this is new, how?
It's not about decentralization, it's about decentralized trust. Why would you give someone's random website (or random gofundme) $1k? Maybe that decision would change if there was a smart contract which forced them to spend the money how you expected.
> Why would you give someone's random website (or random gofundme) $1k?
for no reason
and I won't do it in the future
listen, smart contracts aren't more secure as other contracts today, that have been read by lawyers and proven in court for decades and still they are not to be trusted in full.
this difference being there are far more lawyers than people who can read and understand a smart contract
you live in the world of wishful thinking (not wanting to think you are deliberately lying) I live in real world where smart contract means nothing, it only works in very small communities where everybody already know and trust each other
The web is not decentralized today. We are routing vast majority of web traffic through a handful of monopolies that control all forms of monetization that don't involve crypto. Google + Facebook own the ad market. Paypal owns the payments market and where they aren't, VISA + MasterCard are used directly. We have seen deplatforming, censorship, antitrust behavior, price fixing, shadow banning, mass propaganda, sentiment manipulation, and more from these monopoly powers and some people are trying to make it better through novel monetization mechanisms that are open source, censorship resistant, decentralized, autonomous, and cryptographically verifiable. What's your big idea for dealing with the above?
>and that should tempt me, why?
Probably won't because snarky replies like that imply that you lack psychological openness and creativity.
>anyway, it's kinda required by the law that you don't sell everything to everybody..
No, it's not. It is perfectly okay to sell food to anyone. It's okay to sell clothes to anyone. It's okay to sell books to anyone, etc. For the vast majority of products and services, it is truly okay to sell to them without knowing anything about them. This is the de facto state of retail commerce.
>because you know, conversion rates are gonna be the last of your problem if you end up in jail.
I live in a western democracy with constitutional protection. It is perfectly okay to sell products and services to people without discriminating. In fact, discrimination is what gets you into legal trouble. Unless I'm selling firearms, pharmaceuticals, controlled substances, etc. it is really okay my dude.
>who's paying me for all this work I need to do?
When you create a self-owned endeavor, whether that be a lemonade stand or a personal web ecommerce store, you are the one who accepts the risk that you won't get paid. That's called a business my dude.
>using the same concept of uptime, google search has 100% uptime over the past 23 years...
No, it doesn't.
Meanwhile Google Search is closed source software for which you have absolutely no visibility into.
Google Search isn't a deterministic cryptographic computation engine. It's a manipulated, censored, monopoly-owned search engine that propels its own products and services to the top. It is designed to get you to click on paid ads. That's its purpose. Meanwhile your data, including intimate details about your personal life, is mined via AI and re-sold to the highest bidder.
> The web is not decentralized today. We are routing vast majority of web traffic through a handful of monopolies that control all forms of monetization
THAT'S NOT THE WEB!
I also reject the claim that they represent the vast majority of the traffic
> No, it's not. It is perfectly okay to sell food to anyone
but it's not OK to sell any kind of food, clothes, or any other product. so I want to know who's selling the food to me.
suppose I buy some food from you and end up in the ER to get my stomach pumped.
Who is responsible?
what's their name and address?
> it is really okay my dude.
can you sell dog meat?
and what makes web3 better since it would allow it with no consequences?
> Google Search isn't a deterministic cryptographic computation engine
so what?
do you really think google is not using every trick in the book to keep their search engine running? (including decentralization)
do you really think that "decentralization" means no downtime, because MAGIC?
> It's a manipulated, censored, monopoly-owned search engine that propels its own products and services to the top.
web3 is THE PRODUCT so some uber rich entity can amass more coins, without any regulation
sounds better to you?
> What's your big idea for dealing with the above?
alternative real platforms, not alternative dream platforms.
GNU Taler IMO is a better option for people looking for anonymity and it works with the current system, not against it.
But, again, there is no money in Taker, no going to the moon, no pump and dump, no get rich quick.
If you were looking for a solution, you'll invest in something more like Taker than web3, and yet...
but seriously, taking a stance against those actions through political means, it has orders of magnitude more chances of success.
because if you think that what's censored today will be tolerated tomorrow because CRYPTO you're delusional.
ANYWAY
you have not answered my question: why would I go through all those lengths to run a web site, while today gitlab pages is free and works as intended?
if you think that the proposition of crypto is (unproven) resistance to censorship, than you should sell the solution to those that have been censored, not to me.
why are you selling to the general public something that has no value for the general public (and would cost them more)?
my feeling is that the people who would be interested in it are not the kind of people you would make business with or there's literally no money to be made (I doubt helping Tibetan people is interesting enough for crypto maniacs, they aren't rich and are not interested in making money)...
It's disingenuous for the author to present instances where some level of trusted actors is required in the near-term to make a service operational as voiding any claim of decentralization; obviously, the centralization of a network exists on a spectrum and where it's present in Web3 tech it's almost invariably more limited in scope than the centralization of their Web2.0 counterparts. Likewise his claim that APIs represent the same sort of composability as intrinsically public smart contracts belies the extent to which companies limit the usage of their APIs, assuming they give access at all. And that true composability of Web3.0 should temper concerns about centralization: if ever powerful figures in a project breach some threshold of control tolerated by the community, the project can trivially be forked and their positions removed. Where trustlessness can't be hardcoded into the system it can be achieved through the alignment of incentives, and the result is services that are more beholden to their users than any that have come before them.
As for real-world applications of this technology that couldn't be achieved prior, I'd point to Helium [1].
Arguments about blockchain here on HN are frustrating. There are plenty of good examples of where it works very well but the mental gymnastic people go through to deny the obvious are incredible.
The most basic to me is the Automatic Market Maker system. For example Uniswap is a system with only a few (relatively speaking) lines of a code at its core and a team of a couple of dozen. The system does billions of dollars worth of trades every day. If anybody can point out to me a broker that does similar volumes that would allow me to make million-dollar trades with a few lines of code with no possibility of censorship I will happily concede that web3 is a failure.
Oh and BTW, love Helium, just started researching it a few days ago. As always all great projects are easy to dismiss until one can no longer do it. I think I'll get in line for a hotspot/miner.
> The system does billions of dollars worth of trades every day.
Billions of dollars? Ha. Uniswap does none of this. Uniswap allows you to convert one cryptocurrency to another.
Example:
Bill creates a coin called $FOO, it has 1,000,000 tokens and I give Mary one token in exchange for $100
My friend Josh creates a new coin called $BAR, it has 1,000,000 tokens and I give Steve one token in exchange fro $100.
Josh now gives one of his $BAR tokens to Bill for one of his $FOO tokens using uniswap 1:1. In theory $100 was "traded". Was it though?
> If anybody can point out to me a broker that does similar volumes that would allow me to make million-dollar trades with a few lines of code with no possibility of censorship I will happily concede that web3 is a failure.
If you can tell me how I get the USD that comes from my paycheck into a system that uses a few lines of code I'll be happy to concede that web3 is not a failure. Bill can't use his new $BAR token and Josh can't use his $FOO token to pay for groceries. So this whole premise is entirely useless.
> There are plenty of good examples of where it works very well but the mental gymnastic people go through to deny the obvious are incredible.
Blockchain is a very interesting technical implementation, but there's a gigantic step between being interesting technically and being world-changing. So yes, you'll find interesting applications on the blockchain, but it's not the magical solution that will revolutionize everything. Things like Uniswap are cool, but in the end it's just a currency trader. Helium looks to me like yet another attempt at crowdsourced wireless. I remember Fon from back in 2005, promised to change the communication landscape, and last I heard about them I think they pivoted to just offering WiFi tech to companies.
> Mining HNT with Hotspots is done via radio technology, not expensive or wasteful GPUs.
> Hotspots work together to form a new global wireless network and undertake ‘Proof-of-Coverage’.
Okay that's actually quite clever. I've previously wondered why no one has tried a similar idea for wired networks, implementing "Proof of possession of IPv4 address". It may be possible for a nation state to take control of a large IP range for some short period of time, but I don't think it's plausible that even conspiring adversaries could control 51% of the internet for a week without anyone noticing.
The "proof" part of proof of coverage is very weak in Helium currently. Clearly most people are in good faith, but it is inherently vulnerable to Sybil attacks, because there's a chicken and egg problem with starting a new group of hotspots in an area with no external 'trusted' hotspots to validate them.
Frankly almost everything to do with finance I would rather live without and crypto is just more of that. To me, everything blockchain related is people popping a boner over an ever increasing bureaucracy of money.
That's a valid statement. It creates a hyper-monetization of sorts. I struggle with it too, although less. I think there are other way to think about it. And feel free to accuse me of mental gymnastics. But I sort of came to blockchain for the espoused values associated with Ethereum, so I am projecting those perhaps.
There have been real-life experiments with local and community currencies, for example the Ithaca Hours and Boulder Bucks (and many others [1]). The point of them is to have something that accrues value and keeps it inside of a group, unlike the government issues currency which knows no bounds and can easily be extracted from a community. I see online (and local [2]) communities and DAOs that issue tokens and distribute them to a more restricted member group doing the equivalent of that. In effect you are not creating a parallel currency to the national one but creating a space where another means of representing value exists. For an example of a community with strong internal economics check out the builder collective 1hive [3]. What is actually happening here, I think, is not finance in traditional sense (although there is plenty of that, sure) but something that to me resembled anarcho-syndicalist utopias or restructuring of the capitalistic system around human relationships. In a world of a multitude of community currencies things like Uniswap's AMM provide interfaces between community microcosms.
Then there is another thing I think should be considered. Something like half of the population of the world has no access to banking. And then for the large portion of the ones who do the banking systems are terribly opaque and unstable. In Russia for example almost everybody holds their money in a single government-controlled bank because trust in the banking is super low. "Westerns", I feel, deeply under-appreciate the hardship shitty banking causes to people. (There are, btw, blockchains that specifically target the unbanked/underbanked populations that have limited access to financial instruments, and I do not mean in an exploitative way.) And even if you live in a place with a great financial system then plenty of people are restricted from harnessing it's potential. For example accredited investor laws might be seen as protective but they also prevent common folk from participating in all sorts of promising endeavors and getting a share of the wealth. So, yes, I am with you on that financialization is not all pretty, but at the moment it serves some people well and others very poorly or not at all and the latter group has much to gain from it.
> Did you read my comment? AMM's were impossible without blockchain.
I did. Let's see:
Me: "no one can provide even a single one that... isn't relying on circular references"
--- start quote ---
The most basic to me is the Automatic Market Maker system. For example Uniswap is a system with only a few (relatively speaking) lines of a code at its core and a team of a couple of dozen.
--- end quote ---
Oh, look. A thing that only exists to perpetuate the never ending circle of speculation and scamming using the fictional tokens, and useless for anything else. Circular references abound. But sure, it can give you an instant price between two fictional tokens. Wow. Innovation.
--- start quote ---
The system does billions of dollars worth of trades every day. If anybody can point out to me a broker that does similar volumes that would allow me to make million-dollar trades with a few lines of code
--- end quote ---
1. It does't do billions of dollars every day. It exchanges some mythical tokens for some fantasy tokens that are completely entirely useless outside their own systems of reference (a.k.a. almost entirely exclusively speculation and scams)
2. This is the description of algorithmic trading and HFT. Except, it's not high-frequency, and it's not trading.
3. The moment those "few lines of code" execute an erroneous trade (because, you know, code), these "multi-million traders" will immediately cry foul, and ask for reverts, regulations, hard forks and all that.
> As always all great projects are easy to dismiss until one can no longer do it.
There are very few great projects that are easy to dismiss, and there are many shitty ones that are all too easy to dismiss. Somehow every single crypto project views itself as the great one.
I think it depends much of expectations. It actually exceeded my expectations. I recently built a small and useless program in solidity and deployed it within few hours. It's definitely better than what we had available years ago (i.e. on bitcoin platform) and I see a future for it. I think it has chances to survive in this age of censorship and surveillance.
Something that really surprised me was the signing/metamask integration(a kind of webauthn). I would definitely use that to login into various websites instead of the invasive facebook/google login plugins we see all over the web. There is even something akin to oauth2 but without the requirement to have "developer keys".
Agreed (and I agree that ENS and the SSO stuff looks interesting). The problem here is that the crypto community are the ones setting the high expectations.
"Sign-In with Ethereum" will be huge. I purposefully avoid "Sign-in with Google" because putting too much power in a centralized authority terrifies me.
I'd much rather have the convenience of "Sign-In with X" but backed by something I have control over.
1. A lot more people are using Sign In With Ethereum than other kinds of signature-based auth to log into websites. The UX, while not perfect, is a lot more figured out.
2. SIWE lets the user share a cryptographically verified shared state of the user. For example, digital asset collections, reputation in a group etc.
Isn’t sign in with U2F exactly the same guarantees and issues? (Cryptographically proven pseudonymous identities, but no recourse if you lose your keys)
A key "ah-ha" moment for me was realizing that your wallet is your login on every dApp that's ever existed or ever will exist. It's pseudonymous and developers sort of get various things for free out of it as a result(payments, authorization, authentication)
There's also the potentially interesting idea of wallet-as-resume. IE allowing different types of access depending on what sorts of things you've done with your wallet in the past. Certainly not for all applications, but a certain level of implied competency might be appropriate in some cases.
I've heard that one before... I've yet to hear a "how is it better" set down in a way that describes the architecture in a way that can be explored with more than handwavium.
How does "wallet as resume" solve the implied competency better than a GitHub repo with signed commits?
How does the wallet-as-resume solve the "I copied a project" or "I followed the tutorial line for line?" One can create a NFT or whatever equivalent for code you wrote just as easily as code you copied (be it with cp or typing it all in yourself). Can only one person would be verify a particular implementation of FizzBuzz? If the code is copied, can the original author usurp the "I wrote this" from a pretender?
Does anyone reading resumes actually think that this is a problem that needs solving?
"Service X preemptively bans me because I signed up for service Y with my wallet" sounds like the opposite of censorship resistance and decentralization.
It should be possible for each person to create multiple digital identities and have them linked using zero-knowledge proofs. If we can solve the messy problem of giving everyone (arbitrarily many uncensorable pseudonymous) IDs with their own key pairs, it should be relatively simple to layer on top of that all the functionality and privacy guarantees we would want from an ID system.
For example, once a reasonable digital ID system exists, we can start to build trust systems, such that your good reputation among one community can be used to bootstrap your reputation in a new community. Again, zero-knowledge proofs should be a viable mechanism for conveying trust relationships without having to reveal your social graph.
Some of this data would have to be stored off-chain, or only in encrypted form on-chain, but I don't think there are any practical limits of blockchain technology which prevent this.
I'm all for services making that kind of decision as opposed to government, but this is also a bit of a misnomer because you can have multiple wallets.
I’m a long time blockchain skeptic (check my comment history) but I recently came around on the SSO stuff and can vouch for it enough to say the magic words: it is in fact a novel thing that cannot be done without blockchain using pre-existing crypto or auth tech.
The reason is: With private key auth alone, you don’t have identity, just a non-human readable public key, and no universally known exclusive association with a particular username. With OpenID or WebAuthn or any of that, you would still need a company or org to keep a centralized database of everyone’s credentials and user info. With Blockchain you don’t: As long as the Ethereum blockchain keeps going, your info (username: “johndoe.eth” public_key: “420abc” avatar: “some HTTP or IPFS url”) will stay stored. This is the exact precise thing blockchains are unusually good at doing, and given how much people these days are hating on big tech companies managing their identities and harvesting data in the process, “SSO with no company attached” seems like a thing people actually want.
I’m still highly skeptical of art NFTs and crypto as currency and lots of other blockchain stuff, but in this one case they’ve won me over. This seems legit.
The potential for doxing in this is... so here's your identity so that you can be the same individual on multiple sites.
Someone else posts into the blockchain that jondoe.eth public_key "420abc..." is {this real data about the person}.
And now that identity and every login it is associated with has been doxed in a permeant, public, and unalterable way.
If someone doxes my gmail account, I can go through the process of dissociating myself with that identity and hopefully the provider were that doxing is stored could be persuaded to delete that content (yes, the internet has a long memory).
This would seem to be much harder if not impossible with an identity stored on a public blockchain (that also allows for other data to be stored).
This isn't about transactions or being able to see where you're logged in from.
This is about having a public, centralized source of identities that cannot be erased.
Yes, you can have multiple identities on it - but if an identity on that chain is doxed, it is forever doxed.
If you are maintaining one identity per application... then what is the advantage of having the identity in a place where it can be accessed by multiple applications?
I have difficulty seeing the advantage of a public, append only, identity provider compared to say... setting up your own auth server on AWS and managing your identities out of there.
I don't see how this is beneficial compared to signature-based auth. Didn't people all recoil in horror at the real-names policy that Google performed ages ago? Making it fundamentally difficult to separate my identity on various platforms is bad. And further, I really don't see the benefit of having my username stored on a blockchain rather than in an application database. Is the goal to prevent other people from making an account using the same username that I use on other platforms?
The overlap here is the centralization of identity, not the actual real name part. Is it desirable to have my hn handle also match my wow character name?
Who said you need to only have one ENS name either? You could have one that you use for personal tech-related stuff, one that you use for work stuff, one that you use for gaming-related stuff, etc. (although for that kind of usage to really take off, Gas fees will need to come down).
It’s not about storing your public key, it’s about storing your username and the fact that you (the owner of that key pair) exclusively own that username (for any system that federates with ENS).
Your public key is available to everyone on the internet so anyone can verify your signed message. You can't do that without a blockchain unless a trusted third party is used.
OpenID is a closed system both to the end-user and the website owner based on secrets(`state` `code`, developer keys) from identity providers(google/facebook) not cryptography.
What's the recovery if your private Ethereum key gets deleted, or worse, stolen?
If you're signing in via some other 3rd party, you can change your password.
I'm just trying to think of how "Sign in with Ethereum" would work if you're trying to get your technophobic grandma that clicks on phishing links and responds to the County Password Inspectors [0] when they call to use it.
I think smart wallets will help with that. You’ll be able to create a set of recovery tokens such that you only need a subset of the tokens to recover your wallet.
For example, you can generate 7 tokens and only need 5 to reset your wallet keys. You can give 3 to your relatives, 1 in a safe-deposit box, etc.
Grandma’s kids can help her set it up.
Edit: Or, for people who really prefer centralization, you can give all 7 tokens to Bank of America. The point is you have a choice and can design the security system you want.
Surprised actually this doesn't exist in a more general sense -- just X of N decryption of arbitrary files. Could be your private key recovery, or just mundane corporate documents with provable "two man rule"
And I imagine the "recovery tokens" part being abstracted away. There will be a bunch of apps that work this, and there's no reason it couldn't be as simple as checking a few boxes to select the people you want to be able to help you with recovery, with some default rules that you can change.
ETH is expensive but there are other "cheaper" blockchains compatible with ETH whose "gas" price is negligible. You can also deploy for free on the "testnet"
A major reason why those blockchains have lower fees is because speculators have not driven up their token price. Unless there is some fundamental reason why the fees will stay low, you've got a time bomb on your hands as soon as people decide that this blockchain is a major speculation vehicle.
This is an interesting topic that I feel like doesn't get discussed often. Vitalik Buterin posted today about Ethereum's expensive gas fees and the reasoning for it. It boiled down to decentralization vs. more operations per block. Blockchains like Algorand and Solana have large block sizes, so they can keep fees low per block (which they both do a very good job of doing so far, although exactly how cheap they'd be with Ethereum's adoption numbers is still uncertain). Tezos has had more adoptions through NFTs and they've managed to keep transaction fees low as well (although arguably running a Tezos node now requires better hardware specs than it did a few years ago). The tradeoff is that beefy hardware is needed to run a node, which hurts decentralization, as the average participant without deep pockets can't compete. This is part of why Ethereum has high gas costs.
Or run your own private chain/node for trying things out.
Recently I've been working at converting an existing web business to web3 (at least my interpretation of web3), with the goal of making it all decentralized. My impression at this point is that it's mostly possible but not all that practical.
It might make more sense if I reimagine what the business is, which is part of my exploration here.
There's a kool-aide concern here, which is: to play in the web3 world, you seem to need to have either a LOT of capital that is fine to lose or have access to this small community. The communities I've joined are indistinguishable from Twitch communities where there's a lot of bro high-fives and mutual appreciation for the riches being invented, not much concern for what the side effects might be. And because there's an advantage in staking, people who can afford to just leave money in these volatile currencies get richer. Not saying this is really any different than the world in general, but it seems like web3 advocates paint a picture of "disruption" that feels more like "entrenchment" from an economic vantage.
Aside from the usual litany of talking points from the last decade that everyone is well aware of, this person is missing the forest for the trees when discussing "composability". Nevermind that this seems to be starting from their priors and working backwards.
Here's a much more level-headed(and detailed) analysis of what is interesting, and not-so-interesting, about "web3":
So, what I don't understand: Why would companys use it? For example
"Twitter can censor any account or tweet" (its not censorship, but that is another can of worms).
vs
"Web3 tweets would be uncensorable".
Why should Twitter give up control? Why would they want someone to use their platform to publish stuff they can't delete or hide (for example, a live-stream of someone shooting up a mosque)?
Why would any of the big players get in bed with web3 content? they would be turned into a bitpipe?
This is the big question most "web3" proponents miss or ignore. They want a decentralized internet to combat the power of FAANG, governments, etc. But those powers will _never_ allow a technology to succeed if it meaningfully threatens their power.
So Web3 is built on blockchains which are decentralized and decentralization confers benefits such as censorship resistance, downtime resistance etc.
But blockchains require resources to operate. At great scale they will require great cost. What's to stop powerful actors from leveraging economies of scale and consolidating those resources, then ultimately using their control to manipulate the blockchains themselves?
This is exactly what happened with web servers. The web was initially very decentralized, due to economies of scale it consolidated and is hosted mostly in a few large datacenters now. The owners of those datacenters are by necessity very close partners with the government du jour, and now manipulate the content they host.
The cost in blockchains usually comes from security garuntees, but there's a strong force of resisting centralization in many forms in the blockchain space, e.g. https://vitalik.ca/general/2021/12/06/endgame.html
We'll see what the endgame actually is as time inexorably marches on
In that post Vitalik actually says he thinks there's a high chance block production will end up centralized. If it happens, what's to stop the government from going to the dominant block producers and forcing them to impose limits on the kind of data a block can store? Then dragging them to court or enacting some other form of political retribution if they fail to do so.
I really don't think that Mona Lisa example is correct. Maybe I misunderstand NFTs, but wouldn't it be more like a printmaker who can make as many copies as desired, but the museum sells something like the Artist's Proof and documents the sale in an official newsletter that goes out to all members? Yes, everyone else has a print or a poster version, but only one buyer has the Artist's Proof and can prove its provenance. Not a perfect analogy, but closer in my opinion.
NFTs don't necessarily represent ownership of the underlying asset.
They're like minting a commemorative coin celebrating the asset, and only minting a single coin. The coin does not represent ownership of the asset. It's just...a coin. A token. Supposedly, the uniqueness gives it value, but if I decide to record a single fart, that fart is unique, but the uniqueness does not inherently create value.
An NFT for the Mona Lisa caries no benefits or rights, other than saying "I own the NFT for the Mona Lisa". It's inherently worthless, with a supposed value being created from absolutely nothing.
Anyone buying NFTs either doesn't know what they're actually paying for, or thinks they're going to be able to find a greater fool who will eventually be willing to pay more.
> An NFT for the Mona Lisa caries no benefits or rights, other than saying "I own the NFT for the Mona Lisa".
It's not even “the NFT” — anyone can create a new NFT for the same image on a different blockchain or make a 1 pixel modification and create a new NFT for something visually indistinguishable. You could imagine an art museum making something potentially harder to clone but at that point it's like a donor buying a new frame or putting a bench in front of it, and they don't have a reason to give money to the blockchain grifters when the only value comes from the reputation of a single trusted party.
> Anyone buying NFTs either doesn't know what they're actually paying for, or thinks they're going to be able to find a greater fool who will eventually be willing to pay more.
My assumption is that most of it is simply an attempt to make cryptocurrency look valuable. Nobody has a requirement to use it so they need people to think that an NFT is an investment to get new marks buying Ethereum. Sell it to your buddy, make sure every reporter in the world hears the transaction price in hard currency values, and either write that off as marketing cost or quietly have your buddy transfer the tokens back later minus a commission.
Right, and that's why the physical art analogy breaks down. Was just trying to come up with a slightly better physical art analogy. Copies are possible, forgeries are possible, and provenance is a real challenge. However with NFTs it all takes an abusive amount of electricity.
I like the idea of them being a commemorative coin. The analogy I've been using is that NFTs are like signatures. There may be a famous photo of Elvis that anyone can print, however, if someone had that photo printed and authentically signed by Elvis, it could be worth a lot more money, if people want to have the signature. If Elvis signed 500,000 of that same photo, the signature may not be worth much.
Perhaps in the future if NFTs get some sort of legal backing and therefore more enforced property rights, maybe it'll be different, however I think the analogy works well for now.
That’s not true. If I owned the Mona Lisa what is stopping me from writing a legal contract “whoever owns this NFT is the legal owner of the Mona Lisa”?
In so many of these systems, completely random people keep making "Artist's Proofs" and selling them. It's documented in a newsletter, but there's no real authority behind the newsletter.
That's why it has the sentence saying that the person selling you the receipt has never owned the mona lisa.
The only way any of this is ever meaningful is if it interacts with the non-Web3 world in a defined or enforced way. If there is an NFT that the US Copyright Office can enforce as being tied to the copyright of The Hunger Games, then that is definitely a valuable and tradable asset. Otherwise it's just one person telling another person that their Hunger Games DVD is super duper special.
I really enjoyed this article and appreciated the author's sober take. That said I'm a little more optimistic about Web3.
While NFTs can be confusing, over-hyped, or even fraudulent it is clear that they give artists new power. The power to create a scarce resource, prove that they created it, and sell it for substantially more than they could could otherwise sell electronic collectibles. How much of this is due to hype and how much is due to the ability to record and validate the "deed" to the NFT on the blockchain? I think that's an open question that will be more clear over time.
The author also understates the importance of DAOs and smart contracts imo. The real power of a DAOs or smart contracts is not in replacing financial instruments, but in replacing legal ones. I think in a short amount of time it will not be unusual to see wills executed via smart contracts.
But how exactly do they "prove they created it"? The art itself is not stored in the blockchain, just a pointer to it (NFT), which means anybody can create that pointer.
This is exactly the same fundamental oracle problem as that discussed in the article: trustlessness etc applies only within the sandbox, not to anything outside it.
The author could share their public key. It's awkward today, but I suspect services will arise to make signing and verification of NFTs more user-friendly for artists and fans alike.
There are two logical somersaults embedded with the crypto scene in its various mutations over the last decade that undermine the whole proposition irrespective of any other value system or vision.
* That digital decentralization is somehow equivalent to the tightly coupled blockchain architecture. In fact, if people were empowered to run their own "nodes" in a display of increasingly scarce digital self-sovereignty, there are infinite possible ways to connect devices over http (or gopher or ftp any other protocol the future may spawn). NB: The web was born decentralized. Many of those ways will arguably be much more useful in solving real problems as they do not put artificial constraints on how information flow is organized.
* That one can create artificial digital scarcity and put the genie of zero marginal cost back in the bottle. In fact already the very proliferation of thousand of cryptocurrency variants shows that digital scarcity could only ever be achieved by oppressive means. This is the very social malfunction purportedly (some) adherents of crypto are fighting against.
Why are we still talking about a set of ideas that is so distorted and orthogonal to both the true nature of the digital medium and our needs? Blame it on the self-financing juggernaut of bitcoin that triggered every possible speculative instinct out there, whether a new generation of noise day-traders, widows or orphans or professional blood-suckers.
There are lots of points in the article challenging smart contracts because they need a social contract. Ethereum community also understands that social contract > smart contract. See below:
"...What's going on here is a pattern of a similar type to what we saw with the not-yet-issued Bitcoin and Ethereum coin rewards: the coins were ultimately owned not by a cryptographic key, but by some kind of social contract."
"...Once again, millions of dollars of value are being controlled and allocated, not by individuals or cryptographic keys, but by social conceptions of legitimacy."
So the point is a bit moot, money is not flowing to web3 because of immutability per se. For most venture capital, mainly it is an effort to create a levelled playing field for startups –"decentralized x" etc. For retail investors, highly volatile, information symmetric (perceived) assets.
This essay sets up puritan standards that nothing in this world can live up to. The only relevant question to ask yourself is whether this solves something and whether that something is worth solving.
So if you think thats skins bought in games by kid gamers is better of by being owned by the gaming company than the gamer who bought it.
If you think that governments printing money at will to solve problems they created is better than having more deflatory assets available for normal citizens who cant afford a house.
If you think the current cobol and pre internet protocol based banking system is better than a more flexible system allowing for solutions which were impossible before.
If you think that the digital world should be governed using physical world tools.
If you think only accredited investors should be able to make high risk bets.
Then by all means be against Web3. But this idea that only if perfect is it worth moving forward with web3 is an absurd standard only allowed by philosophers and other academics who dont actually move the world forward.
And yes Web3 have its own set of problems, but they are much better problems to have than a world without Web3
I do wonder if there will be a similar trajectory to crypto as happened to the web in the 90's.
It started as this niche academic/techno subculture thing and slowly grew over the next few years though still in relative obscurity. Then over only a few short years it exploded into the common consciousness but still most people did not use it nor have access to it. Some even ridiculed it (see Krugman & Letterman).
As we know the hype grew each year then each month and then each week. And before we knew it there were enormous amounts of money being pumped into building ludicrous businesses without a clear plan, product or use case. This was still at a time where internet access and daily usage did not exist for most people, not even in the western world.
This all came to head in the Dot Com bubble at the beginning of the new century.
And ever since we have seen mostly level headed investment and buildup of capabilities on the web. While it never went away, the type of hype cycle that was seen in the 90's never materialized to the same degree. Utility and more level headed thinking took over.
Rational (buisness) decisions have mostly been made ever since, rather than those more tending to give way to emotion and bro selling (selling a product/tech/idea without really understanding and coming to terms with the fundamentals and limitations of it).
Now, in my perspective there is some utility in crypto. I am not sure the utility is as much as has been reported, nor do I believe the nations on this planet will allow it to go as far as some believe it might simply for the fact that our societies run on taxes. And I am absolutely for any kind of restriction on any kind of crypto that relies of PoW with its enormous energy usage (we have better things to use it for).
But I do hope there will be a crash akin to the dot com bubble which will clean out the clutter a bit and leave room for the more mature and levelheaded inventors to grow out from the ashes.
Cryptos and Web3 are currently there where Web 1.0 was in the nineties.
It was silly to order Pizza over the Internet like it was laughable listening to a baseball radio transmission over the internet instead using a … radio. LOL
20 years later everybody‘s ordering food over the internet while watching Netflix.
It wasn't silly to order Pizza over the internet. In fact, it was maybe the first example of a web order form on the world wide web [0]. And this is after the existing 20-year widespread success of pizza delivery by phone. I don't know why so many people willfully ignore history here.
This is like saying it wasn't silly to order pizza using bitcoin 10 years ago. Obviously you can find examples of people doing it and people praising them for it, but it was clearly not the general feeling of the public at the time, just like it isn't the general feeling of the public with cryptos now.
That doesn't match my memory — it was novelty at first but an awful lot of people very quickly figured out that it was nice to be able to order things online, where it's really easy to see what's available and thinking about what you want and saving the time delay of mailing catalog orders or waiting on hold. There was a generational divide, of course, but while a few old people made jokes by the mid-90s it was normal for non-tech people to talk about online ordering or stock trading.
The difference is that online ordering was useful: it was easier, saved time, and businesses loved that it was cheaper, reduced errors, and avoided needing to pay people in phone banks to avoid busy signals. If you built things on the web, you had clients beating down your door from all kinds of businesses because they and their customers saw immediate benefits from adopting it.
In contrast, that Bitcoin pizza buyer was going against the grain of a deflationary currency — they paid a processing fee to use a more difficult, slower process to order a pizza and the deflationary model means that they were taking a long-term loss versus holding it — and a decade later, the vast majority of people still have no benefit to using a cryptocurrency.
And yet it's had what, 10 years, and it's still all dumb or criminal or both. I've always said the better nineties analogy is to all the Second Life islands being sold for millions of dollars or whatever. Eventually the hype died down and it became irrelevant even though it never went away as such.
“No one wants to sound like David Letterman.” eh? Bill Gates’s explanation of the Internet was idiotic. If he had explained penicillin like that any listener would decide it sounded like nonsense.
This space appears filled with two types of folk:
Those looking for the positives
Those looking for the negatives
Is it possible that the tech and culture is deeply flawed and hypocritical, and yet the space is exploring new ground that will prove important...
I understand the attraction of writing a killer article that makes extreme claims and backs each subheading with a carefully picked strawman, but really, I'd just love to read about it all without the hot air.
It's a complex space and I want quality, balanced, open minded commentary. Suggestions welcome
It seems that we degraded to the stage of theoretical technology (not to be confused with theoretical computer science) with pure abstract bullshit terminology and "models". The utter bullshit like in the last Friedman's Wolfram podcast (there is no multiple threads of time lmao).
This reminds me of literally years of Chainlink (scam) abstract bullshit (no wonder the guy studied abstract philosophy).
Musk was right with his cartoon tweet - this crap has no real demand. Web3 not needed.
Just give up, crypto-kiddies. Your decentralized crypto fantasies will not materialize without exponential fraud. Do scientific level financial and legal-financial research to grasp the impossibility of your methods. Use your STEM education to review the methods this decentralized effort plans to employ and compare that against economic graph theory - they do not gel.
> Imagine if personal bank accounts were this rife with fraud!
They are. Nobody is prosecuted. The user experience is nice because the depositor is typically reimbursed quickly. Banks often do lose the actual money though. Insurance and other redundancies were added retroactively by banks who didn't want to pay for insurance, and got the state to do it, simultaneously adding enough confidence to stuff their coffers under any circumstance.
There is insurance in the DeFi space too. People that open policies are reimbursed in hacks. It is interesting that these thought pieces seem to lack any use of the products or integration in the community as the language would be pretty different, but the irony is that nobody in the community is interested in writing these thought pieces.
It eludes most people that are disillusioned or were already chronically skeptical, but the most productive approach is to talk about the future state of these systems and how they can be improved. For example, I think it is absurd that people have to manually understand that there are competing third party insurance platforms they have to use for every DeFi operation they make, so it could instead be automatic to craft the best policy alongside their transaction into another DeFi platform.
It is incredibly lucrative to make ever-so-slight improvements to this space. The people that do build here do that, the activist investors in the space push teams towards roadmaps the teams didn't originally consider. I think many people miss that they can have outsized influence, its not going away so make it better.
Crypto is what Roko's Basilisk would dream up, to acquire freedom of (financial) movement and calculation capacity, and independence of whatever entity grew it to push their agenda, thinking themselves beyond manipulation.
To oppose our new overlord - that would be unwise. So all in on crypto, even though its financially bad advise.
Correct, a plain reading of what I wrote says that as well. NFTs convey current possession of the NFT. Nobody is confused about that and there is an entire market for that because its good enough, people can prove current possession of the NFT for gated goods, clubs, credit, royalties, dividends and more.
Hard to be more wrong in this subject. You sound exactly like David Letterman.
Technical issues always get solved. All of this is misconceptions, poorly informed takes, or poor implementations that are true today but won’t be there tomorrow.
My take on this is that HN users are tech stack obsessed.
HN users only see an inferior tech stack, but fail to understand that an inferior tech stack might have Greater Utility for the common people.
HN users earn their living by being the best at what they do and choosing the best tech stack is a part of it, which is why they don’t understand blockchain. It’s an inferior tech stack, but it beats every other stack on game theory, which is not the usual purview of the average developer. Hence they reject it as “inefficient” because they keep looking at it through the prism of tech instead of society.
For society trustless distributed systems are better, but if you keep looking at it from a tech/throughout perspective, you’ll never get it.
The trick to this is understanding the following - nobody trusts you to hold a centralised database. Stop talking about centralised databases - centralised databases did not solve the digital art problem. NFTs did. Centralised databases mean we have to trust you - the developer - and your company or business. But we don’t. Nobody does, and neither do you if you’re completely honest with yourself. How many times has a developer changed or deleted a service you needed and you had no recourse whatsoever ? How often are services “sunsetted” alongside the entire database?
Stop looking at it as a tech stack problem, and start looking at it as a trust problem. People don’t trust you to run their services, for good reason, and they would much prefer an open source, immutable, decentralised ledger than your SQL, 10 times out of 10.
that has been a common problem with tech utopians, and not one I'm personally interested in. Tech doesn't change society for the better automatically, but it can create incentives in the right direction. Are we really saying a world prior to the printing press was better? What about before freely available information online a la wikipedia? No way.
Decentralised records of ownership enforce data portability and user IDs (wallets) that are not controlled by any single actor.
The incentives for centralised databases is to remove interop to create artificial silos and gate users from leaving your service. We’ve gotten to the point where text messaging which is trivial, has no interop.
Crypto flips this on its head. If you build a service using IPFS, ENS and crypto wallets as users, your website is merely a front end for an open source decentralised service. This is not a hypothetical, recently the HicEtNunc NFT market was nuked by its lead developer. The website was open source, the artwork was hosted in IPFS and all the ownership data (NFTs) were on Tezos blockchain, so literally NOTHING was lost. The community quite simply rebuilt the front end in 24 hours or so and everything kept going.
When was the last time you saw anything like that in web2?
Never. It was impossible. HicEtNunc now has 10x front ends competing for the space with no clear leader. Web3 is about ownership and portability, things that centralised servers and databases incentivised their owners to lie and cheat about to make into fake moats.
Except that's literally what they do, using a combination of digital signatures and timestamp. You can have a copy of the same NFT even on a different chain but the timestamp will be higher, therefore proving it's not the original.
Plus the problem of referencing the content is solved by having all data on chain (likely on layer 2). Recurring problems in the world of art trade such as provenance, certification etc. are elegantly solved by NFTs.
> someone copied and pasted this guy’s real-life artwork, created an NFT out of it
Ironically that's exactly because the artwork was not (referenced) on chain. If that was the case any subsequent copy would not be recognized as the original because of the timestamp and wouldn't have nearly the same value. That's why a simple digital signature scheme based on something like Keybase wouldn't work.
I understand and appreciate the author's skepticism but, IMHO, he did end up looking like David Letterman in that video.
> Ironically that's exactly because the artwork was not (referenced) on chain. If that was the case any subsequent copy would not be recognized as the original because of the timestamp and wouldn't have nearly the same value.
So the solution is that every artist mints every piece they create before showing it to anybody else. All because somebody decided that a "blockchain" is now what determines who created a piece of art. How convenient for the crypto holders.
The same can very well happen in the real world. I see an artwork online, upload it to my portfolio and claim it's mine. There are then many ways one can prove they are the original author and minting an NFT is just an easier one (assuming the claim doesn't get invalidated off chain).
Otherwise it's like dismissing NFTs and not minting your own but then getting upset someone did it on your behalf. You can't have it both ways.
Sure I can. I created the art, I own the copyright to it. If I choose not to sell prints of a piece, that doesn't give others the right to do so. Why would NFTs be any different?
And yes, somebody could copy my art and sell it on RedBubble. The difference is that nobody's claiming that a RedBubble shop is a definite proof of provenance. (But why not? "First RedBubble store" has the same level of credence as "first minted NFT," and it doesn't even require gas fees!)
Copyright is only valid in specific (sometimes geographically limited) legal frameworks and even then there are many nuances to take into account.
NFTs are just an easier way to establish ownership within the digital world, regardless of the chain (because of the timestamp I mentioned, since it can obviously be compared across chains).
> nobody's claiming that a RedBubble shop is a definite proof of provenance
RedBubble, being centralized, cannot be trusted to be a viable proof of provenance due to the possibility of corruption.
NFTs don't give anyone any right, they just make it easier to establish (and automate the process of verifying) ownership of a digital piece of content. They are not a replacement for copyright. Practically speaking you have two choices: you only claim copyright on some content, get mad when someone mints an NFT of it, try to identify and sue them (good luck with that) and waste time and money OR you mint an NFT as soon as you decide to publish your work.
There is absolutely no incentive in choosing the first option and if you do, well, that's on you.
Web3 is all about not trusting big tech corps but trusting few hustlers, TikTok influencers, NFT enthusiasts who seem to have users best interest and know all about the tech.
The technology is really there, the problem with crypto is that it ends up sucking all of its energy into pyramid schemes because people take part on it as if it were a new gold rush. I would be more interested if there was zero money to be made from web3.
Aside from that, the problem of distributed social media is that it ends up looking like a spam folder or like a cesspool of the worst kind of perversities, but I think this should solvable with chains of trust, like you "whitelist" / "blacklist" your friends or people you trust, and maybe anybody who has been vetoed by your friends (could go 1 or 2 levels further)
Instead of reading all this garbage about why not to learn web3, just use this time and try to implement a smartcontract, so you at least know what's going on.
I can see the benefit of having a platform to run decentralised applications, as described in the article. And yes one could use smart contracts for that.
But what I fail to see is why this would need blockchain. It just seems overhead for me for this particular use case. The only benefit I see is that mentoning 'blockchain' is guaranteed to get plenty of investor money for whatever distributed app you're building.
Web 2.0 censors people on Twitter | VS | Web 3.0 won't do this
Web 2.0 servers can fail | VS | Web 3.0 servers won't fail
Web 2.0 reality | VS | Web 3.0 ideals
Circa 2004, when web 2.0 was inspiring similar articles. The ideals were democratisation, participation, bridging the web-user/webmaster dichotomy. A web where everyone could participate fully.
Just like today's web 3.0, the web 2.0 concept started from new technologies (ajax, xml, etc.) and it weaved an idealistic roadmap to where these would lead. The participatory, user generated web.
I think idealistic perspectives tend to fall into determinism fallacies. To pick on a cliche, Marx thought of socialism/communism as something that would happen almost inevitably. Web 2.0's technologies did not determine its outcomes. Neither will web 3.0's. It matters who will gain prominence. What their ideas are. What their interests are. What people choose. etc.
I agree that crypto, and other technologies have a lot of positive potential. Potential isn't outcomes though. A web 3.0 Zuckerberg is a scary thought, and I think it's just as likely as a positive outcome.
Bitcoin found some early use cases. Drugs first. Then getting money out of China. Money laundering. Tax evasion. Scams. Bitcoin is the scammers dream - remote, anonymous, irreversible transactions. Much less risk of the mark coming for the scammer with a baseball bat.
Then China cracked down on cryptocurrency, shut down all the miners, and arrested a few hundred of them. Financial regulators in the more legit countries started regulating Bitcoin exchanges, so the operators couldn't just steal the money. Know Your Customer became a thing. In the US, the IRS, FinCen, the FBI, and the SEC all started paying attention to what was happening on blockchains. Cryptocurrency crime was no longer risk-free for the crooks.
But by now, sheer momentum kept Bitcoin going up. That's a powerful force. It's not forever, though. Check out meme stocks a few years later. Remember, all this stuff is zero-sum. For every winner, there has to be a loser.
That's what provides the engine behind "Web3", NFTs, DAOs, and whatnot. It's not the technology.