> I’ve never felt great enthusiasm for crypto. After chatting with these young Chinese, I became more tolerant of their appeal. Digital currencies are solutions looking for problems most everywhere in the Western world, but they have real value for people who suffer from state controls. The crypto community in China has attracted grifters, as it has everywhere else. But it is also creating a community of people trying to envision different paths for the future.
This is where most HN commenters fall down. It is easy to sit in "the west" and hate on crypto, but once you've experienced capital controls first hand in poorer countries, it all starts to make more sense. It goes beyond just paying for things.
The problem with that outlook is that crypto isn't really all that great for people who live under capital controls. It's possibly better than the local currency, depending on what they want to do, but it still has serious drawbacks.
Looking at the USD-BTC price chart over the years, pretty much any time after mid-2017, BTC is just a very risky store of value. It's super volatile. You need to know that what you have will still buy you what you expect in a month, 3 months, a year, etc.
Now, again, this still may be a better deal than the local currency for some people. And if you're primarily using it as a money transmission method (convert local currency to BTC, send to recipient, they convert to their local currency), you lose a lot of the price risk. But that still doesn't make it a good deal.
And that's just one issue that directly affects anyone using it. On top of that there's the proliferation of scams, enabling of criminal activity, ridiculous electricity use, etc.
I think my position has softened, over time, though. I used to be very anti-crypto, and wished for its demise. Now I just kinda don't care too much about it; if people want to spend their time working on the technology to see where it goes, who am I to tell them to do something else with their time? And it does seem to be helping a lot of people who don't have good financial options. And who knows, maybe it'll eventually grow or morph into something I might find useful or interesting.
What is “good” is determined by the options available, not by all theoretically possible options. The average person in say, Argentina, isn’t going to have access to complex financial instruments and so is functionally choosing between a hyperinflating local currency and a volatile-but-still-going-up bitcoin. This is a real world use case and it’s echoed in countless places around the world - most of which, I imagine, the most strident crypto critics haven’t ever been to.
Sure, I get that. And I'm not in a position where I need to use crypto, so I know I'm not going to feel it like someone in that position would. And I agree that they should use the best option available to them, and that crypto might be it.
But otherwise, I disagree: "good" is not solely determined by the options available. When comparing options, you can only say that some are "better" or "worse". Crypto may be better for some people than their other options, but that doesn't make it good. (Consider sayings like "the best of bad options" or "the lesser of evils". It's an acknowledgement that none of the options are good, but some are nonetheless better than others.)
Ideally people in these situations do -- sooner rather than later -- get some actually good options. Maybe crypto will morph into that, or maybe people would get better (and quicker) bang for their buck tackling the problem from a different angle. I don't know what that other angle might be, but I worry that crypto ends up being a sort of local maximum that hits a ceiling, one that is better than the alternatives for some people, but is still not particularly good.
What’s the alternative you’re proposing? For the average person in these countries to push for radical political and economic changes against their governments? Governments which are typically more controlling in the first place? All of this so that they can just not have their meager savings eaten away by inflation?
Again, this kind of criticism has little contact with reality and mostly comes from people without actual experience in using the tech. In the real world, in places with hyperinflation or other financial issues, bitcoin isn’t “the lesser of two evils.”
I think you're not really listening. I explicitly said I don't have any alternatives to offer. Maybe some sort of future magical internet money that doesn't suck in the ways the current crypto ecosystems do?
I also absolutely acknowledged I don't have experience living in that kind of situation. Not sure why you seem to be getting so worked up about this.
I never claimed Bitcoin was the lesser of two evils. I was merely illustrating my disagreement with your assertion that "good" is determined by the options available, not out of hypothetical options or some idea of "objective good". But I do think Bitcoin (and most crypto) can be (for some people) the best of bad/so-so/meh options. And that's great that it exists for people, when their other options are worse.
But I really hope we can do better than this. Obviously we can't right now, and I'm not suggesting that someone who lives under a repressive financial regime is going to have to be the one responsible for figuring out what that is. But I have to believe that better -- something that's actually good, unlike current cryptocurrency -- is possible.
I’m not getting worked up about it, I just don’t really understand this line of criticism. Yeah, it’s not perfect and the people pushing it as some messianic currency solution are obviously grifters. But what technology is perfect?
It is being used right now, today, in ways that benefit people’s lives in demonstrable ways, and so with your admitted lack of alternatives, I don’t quite understand the reasoning here, unless you’re just arguing about the abstract definition of good.
I focused on the real world knowledge because I think a lot of the criticism of bitcoin in general lacks an understanding of how the tech is really used, and is just abstract academic criticism.
Its getting more useful over time. There are good fiat backed stablecoins + ethereum and its peers are all proof-of-stake so no ridiculous electricity usage. But the risk premium of using it(falling prey to scams, hacks, etc) makes no sense in countries with stable financial regimes.
The funny thing about this though is that this is so easy to whatabout. Fraud is all over tradfi. I have a true story. The head of finance got phished. Ended up transferring money to some new bank account number they received on a friday. He called, when they opened, on Monday. The money was gone and the bank wouldn't do anything to return it. Call the police/feds they said.
I think the next step is to build trustless escrow services. I know that sounds weird, but we need some sort of insurance system that if fraud happens, we can get our money back. Programmable money makes that possible and that would be an improvement on what we have today.
Don't forget... how can credit cards afford to absorb the losses? Fees and penalties. Someone always has to pay.
I think another commenter said it better, but you second sentence buries the lede. If crypto is better than the alternatives, people will rationally choose to use it, and that seems like a good thing for them. Even if I agree with literally everything else you said.
The problems with crypto are two folds and I think it's resounding in HN in general:
A- it festers with scams and scammers.
B- it uses astronomic resources world-wide.
Both of these have counter points but the overwhelming majority denies it credibility.
I have for example envisionned systems like "proof of latency" but have never engaged in proving it seriously, due to the overwhelming putrid nature of the crypto world.
I hope some day it turns, I personally love the ideology behind it.
Those two points are valid and I don't deny the credibility at all. As someone who's been involved in crypto for quite some time, I can add 1000 other items to that list.
At the same time, I also think it is wrong to deny/ignore/discount the counter points. In my eyes, there are always two sides to any story.
How does crypto solve capital constraints when you have to convert the fiat to crypto? This is by far the biggest challenge. Crypto is like a solution that is worse than the problem in many instances. Maybe fine for small transactions, but not subverting capital controls.
That is very well put, but it does rely on the government not interfering in the crypto sphere too much. Given the CCP's crackdowns everywhere else, if citizens stashing away money in bitcoin becomes a big problem, they're likely to pay attention to this area too.
After all, you somehow have to get your dollars or RMB or whatever converted into cryptocurrency in the first place, and then get them out again when you want to buy something with them. You also need to hope that the government doesn't have the resources to take over 51% of the network by conscripting all the miners running in their country.
What most people do not consider is that in countries with a lot of capital controls, black/OTC markets are the way most citizens interact. Just head to any gold dealer for all your currency conversion.
You might think, wow, that is crazy, I'm not going to take a bunch of cash to a gold dealer to do that. But the reality is that this is how local citizens do things all day long. It is normal there.
Bitcoin is pseudonymous, not anonymous, right? I guess the people who are actually at legal risk might research it more throughly than some westerners, but I worry that mixing up the two is an easy and common mistake, to the point where it is often informally described as anonymous.
The article seems to suggest that the role of crypto to these young Chinese individuals is that it forms a means of community and a nonjudgemental channel of new thoughts. I feel it's become quite a trope worldwide actually: a following has ammassed not because of the core tenets of the technology itself, but because it is a story of something new and different, promising progress and a severe and much-needed change. When I was younger I was enamored by something called the Venus project, a movement that aimed to re-architecturalize all of society towards a post-scarcity world. Something utterly enthralling to me at the time. But when I attended enough talks and saw the people I was sitting besides, I saw that all I shared in common was a deep disatisfaction with the status quo and a distrust of authority. I saw that topics of discussion extended into various conspiracies, from 9/11 to illuminati and UFOs and beyond. I felt quite alienated at that point and never looked back. That's what I see when I see crypto. It's not a cult, per se, but it seems to gain buy-in in the same brain lobes.. if that makes sense? People make friends, find common validation, and it all snowballs. I dare say: It was never about the blockchain.
This is a great comment. Part of what is missing for most people is utility. Without utility, it is easy to go off on the cultish aspects of it as a replacement. What convinced me was actually being able to use my pet rocks, to do something valuable for myself.
...yeah, but also capital controls make sense. you don't want foreign currency to inflate your economy, as you don't want too much of your currency going abroad. it's not like capital controls are made for fun.
Ofc they are not in the interest of everybody, but usually they are for the greater good.
And despite what the IMF was hammering in the 90s: yes, they really work. (also the IMF backpedaled on this)
Crypto isn't effective against governments. They can just ban it, and since most of them publish all their history in public forever they can find you using it.
It's only useful in situations where it's legal and yet some private actor is not letting you use bank transfers for something. Porn and weird research chemicals maybe.
If I live in one country where it is legal and I travel to another country, where it is illegal. Do you actually think that will stop me from being able to use it?
Due to market forces, it is often easier, and a lot more powerful, for me to use it in the banned country. Once I'm in that other country, I'm also anonymous again.
> Do you actually think that will stop me from being able to use it?
Yes. Obviously you can't do infinite financial crimes by traveling to another country and doing them there. For instance, they can get you the next time you want to travel there.
In this case you also can't use local exchanges if they don't exist and you have to evade the Great Firewall.
I'll point out my favorite post here as well: https://news.ycombinator.com/item?id=26238410