What applications of blockchain do you envision? I have not yet encountered a use that is better served by blockchain than, for example, an append-only DB.
They can handle 5 transactions a second while constantly providing proof to millions of users that the data has not and can not be tampered with, even if you bribe or threaten all 5 lawyers? Those are some superhuman lawyers.
It's preferable where there's a reason to distrust a custodian of the data. Of course, most of the use cases dreamed up don't fit that description, and much of the hype may have eroded confidence in the term.
IMHO, the whole private permission based blockchain thing is just a poor attempt at a very slow database. This concept really hasn't caught on, primarily because of the centralized aspects.
While we are very far way from this concept in the real world, I'd prefer my proof of identity documents to live on something that isn't controlled by any single entity other than myself. Sure makes them a lot more difficult to revoke or modify without my consent.
Even with a hypothetical maximally decentralised system, there's always a centralised chokepoint where a specific organisation (including and perhaps especially, a state) that you wish to prove your identity to chooses to unconditionally accept records from the system.
Well... there is a distinction there... permissioned blockchain, no... "decentralized" bc, yes. All assuming that governments agree to acknowledge it, which, I agree, will likely never happen on a global scale. That said, other globally disruptive things have happened, like shorttermrentals and rideshare... so, who knows.
Imagine 1000 years from now and people are on mars... you think that everyone is going to be carrying around a paper passport book? It is going to look vastly different than it does today. I personally feel that it is important that the technology for things like this are experimented with now.
Remittance, anonymous payments, proof of authorship, decentralized DNS, international financial contract enforcement, provably fair gambling, immutable digital asset ownership, publicly accountable donations... just off the top of my head.
It takes little imagination to see many use cases for a computing system that no single party can control. It is the difference in a dictatorship vs a democracy.
Bitcoin is by far the most secure and decentralized crypto to date.
If you have ideas on how to build an even more decentralized or secure money, then please do so. Regardless, there is definitely need for money outside of the control of centralized actors.
I want crypto to die in a fire. It is 100% a Ponzi scheme with no real world use case. If there was a use, we would have seen something useful come out of the Etherium project by now — other than a demonstration that majority group consensus can rewrite an “immutable” ledger.
If 51% of US politicians all decided the value of the US dollar should become 0, then it would be so... and yet it is still a representative democracy which is a decentralized form of governance.
This is unlikely to happen, because it would be to no ones advantage. Even if they did most of the public would likely just ignore the decision.
It will cost something like $1m/hour to attack Bitcoin, but to even do that you would already need to actually convince 51% of miners to light their profits on fire for no reason.
Even under a very expensive and sustained attack the users of Bitcoin that wish it to have value would simply distribute a blocklist for the compromised nodes and carry on with the 49% that wish for the network to continue as well.
> "If 51% of US politicians all decided the value of the US dollar should become 0, then it would be so..."
You don't understand how things work in the US. There are multiple checks and balances. And if push truly came to shove enough of those politicians would be assassinated to make it 49% (dear FBI: this is a hypothetical as to what a few members of the public would do, not what I, personally, would do). Good luck assassinating a Sybiled validation node.
> "This is unlikely to happen, because it would be to no ones advantage."
No one who has bought in to the protocol. But of advantage to an entity that wants a particular protocol to fail.
> "Even under a very expensive and sustained attack the users of Bitcoin that wish it to have value would simply distribute a blocklist for the compromised nodes and carry on with the 49% that wish for the network to continue as well."
Yes, you'd get a forced split. Can you guarantee that the 51% attacker couldn't gradually hop back on and attack again?
> Good luck assassinating a Sybiled validation node.
No need. We distribute it on an IP blocklist and carry on, just like we handle bad actors on other decentralized systems like email.
Remember that chain splits have happened before and the minority chain and those that agree with its rules and history continue on. Eth Classic is still a thing.
Modern Eth was literally an -intentional- 51% attack to erase a hack. The majority agreed to erase that and on the main ETH network, it became so.
> No one who has bought in to the protocol. But of advantage to an entity that wants a particular protocol to fail.
Once again, we can easily detect and block nodes that are repeatedly trying to lie. It would be annoying, but so is dealing with spam. This is inevitable but manageable and without violence I may add.
> Yes, you'd get a forced split. Can you guarantee that the 51% attacker couldn't gradually hop back on and attack again?
The community could ban all of their nodes and assign higher trust to nodes that did not participate. Any fullnodes that agree they are on a fraudulent chain could agree to go back to the minority chain.
If it happened often we would get better at doing this quickly.
In short, you can temporarily disrupt the Bitcoin network with enough money, but you will never be able to stop those that wish to continue maintaining an honest history.
> "In short, you can temporarily disrupt the Bitcoin network with enough money, but you will never be able to stop those that wish to continue maintaining an honest history. "
If your goal is to make regular people want to avoid using it all you need are sufficient temporary disruptions.
The internet has had many many temporary disruptions over the years due to botnets, etc. The Slammer worm even fully made it inoperable globally. The will to continue communicating at a distance lived on though, and so did the internet.
There are plenty of people like me that actually use and rely on Bitcoin as a tool, so it will live on too.
Without giving you a monologue, I'll give you some food for thought in a very few statements.
1. The internet you know today allowed people to connect and share information globally.
2. Over the years, we've found value in digital things and may, thus, call them assets: e.g., data, media, and information/knowledge.
3. We have no way to deal with digital assets, which has implications and inefficiencies. DRM was a symptom & soft way to deal with this problem.
4. While the internet connects globally, it is not made to reflect ownership on a global level. Real ownership either doesn't exist or is not transparent. And while privacy is important, ownership should at least be cryptographically provable.
5. Blockchains do not aim to replace the internet or your database; they are a layer on top of the internet, giving us a new foundation to rethink and rebuild how we deal with digital value creation.
In some way, it will bring humanity closer on a global level.
On top of that, there are many philosophic, societal, and idealistic ideas. A lot of them require or trigger a systemic change—many of them we might never see happening, at least not in our lifetime.
Because the question needs to be revised. It is not about what you can do with an append only database vs. blockchain. That's not reflecting its purpose.
* Insurances (e.g. your travel insurance) are contracts. They should be digital, standardized, on a public ledger, so that I can travel anywhere and prove that I have one instead of having to bring, a fakeable piece of paper.
* If I resell my phone, transfering the remaining guarantee and/or insurance should be nothing else then a transaction. On the blockchain that's 10x more efficient than the status quo.
* If an artist sells his art the first time for $10, and the person resells it for 10000$, then the artist should be compensated too. Royalty mechanisms can solve for that and avoid secondary markets or at least create a more beneficial secondary.
There are an endless amount of examples which will make a lot of things more efficient, transparent and enforce standardization on a global level. Long way to go, but absolutely worth it.
As usual, all of these "use cases" suffer from the problem at the boundaries (see also Oracle problem), namely that you can automate everything on the blockchain you're using, but once you're back in the real world you no longer have any guarantee. Your new layer of abstraction just leaves you with a more brittle system.
* insurances: you still need somebody outside the smart contract that needs to connect it to what happens. You've just moved the trust from one place to another, and you're not better off.
* transferring money is faster in many countries than it is with (e.g.) BTC when you include the wait for the confirmation blocks. It's also bound to become faster and cheaper, while many blockchains (especially BTC) seem stuck with their processing time. Even countries with slow bank transfers now tend to have a fast solution, like Zelle in the US. Add problems like volatility of the cryptocurrency with the respect to the currency that actually matters, high (and volatile) fees, and transfers via cryptocurrencies is only attractive in a few countries and will only remain so as long as these countries do not improve.
* with art you again have the same boundary problem: the blockchain you use doesn't know what's happening, and only the law will resolve your conflicts.
> efficient, transparent and enforce standardization
So far the blockchain systems have been less efficient than non-blockchain ones they purported to replace, see the usual comparison with the Visa network for example.
Transparency and standardization are orthogonal to the use of a blockchain: using one doesn't mean you can't be opaque or follow any standard.
But this is only because businesses have yet to be built around this technology. These things will change. We are super early. We should not build these use cases everyone is asking for right now. The tech is still early and has to figure out many things. There is a lot of innovation happening on the base- and interoperability level, and it needs a lot more abstraction (e.g., network and account abstraction) to make things more usable.
Standardization also plays a huge role, and yes, in many ways, it's a technological chicken-and-egg problem whereby systems have to work with each other and the chain in a way that makes intermediaries as obsolete as possible.
The transfer speed of money or the general transaction speed - well, that's something that is being solved as we speak. These systems (e.g. Ethereum) have to mature, and many ways are being explored, using known principles like separation of concerns, e.g., separating settlement, execution, and data layers - but in a decentralized manner.
The public and many entrepreneurs need to understand how early this tech is and rush use cases that don't add value as of now. You must go deep and understand that this has to grow from the bottom up.
> this is only because businesses have yet to be built around this technology
No, these are fundamental problems that time can't solve. Businesses aren't built around this technology because it's not advantageous to use it in a legally compliant environment.
Companies in this field keep adding new layers of abstraction pretending they're solving a problem; they're just moving it to somewhere else, but the fundamentals remain the same. Basically running in circle.
It is hard to comprehend what it'd mean to have the world connected via distributed ledgers that provide transparency and would be able to automate a lot of what we do to a much higher degree.
We're not running in circles.
> Businesses aren't built around this technology because it's not advantageous to use it in a legally compliant environment.
This is just one of the reasons. The technology is also not scalable and abstracted enough yet. No one is pretending anything here.
> It is hard to comprehend what it'd mean to have the world connected via distributed ledgers that provide transparency and would be able to automate a lot of what we do to a much higher degree.
idk, take your phone thing as an example. Blockchain doesn't solve anything, because nothing stops me from reselling the phone without transferring the insurance, or transferring the insurance and keeping the phone. The whole problem is that it's not linked to the phone itself.
instead of going on about benefits, what is an industry that currently suffers from an actual problem that a blockchain could solve? because right now I'm not aware of any problems in society where blockchain is the solution
All blockchain proves is that you have access to someone's insurance key. While it would be a bit more difficult or costly than faking a card, it's not impossible. And most places I've been to don't even care about the card or the insurance number, they just ask for my regular ID and insurance provider to verify with.
> resell my phone
Two things:
1) The status quo could be that the new owner has the serial number of the phone. The fact that it isn't this simple (if it really isn't this simple) is because the seller doesn't want to make it that simple.
2) Insurance is particular to a person and their activities. For things such as aftermarket phone insurance the price you pay for the insurance will be based in part on your individual risks. This is obviously not transferable.
I just gave some examples. Tech is early, and the businesses around this new environment still have to be built. It's kind of a chicken-and-egg problem.
It may be early, but it's also actively competing with other systems. Those other systems aren't going to just stay stagnant until blockchain is ready.
But what sets append-only databases apart from blockchains for any of these examples? Why can't I symmetrically say, "It's very early for append-only DBs, and new businesses around them still have to be built"?
Easy. Unlike pen and paper, the operator of an append-only database can publicly distribute it in real-time so that interested parties can read it and audit it for consistency. I don't see what the distributed consensus required by a blockchain adds on top of that, unless you're saying that all these applications require a zero-trust source of truth.
> unless you're saying that all these applications require a zero-trust source of truth.
Not all of them, of course. It's not a wonder child that aims to solve all of humanity's problems. It'll bring humanity closer, though and make it more efficient in many ways. People always try to look so narrow at it.
There are plenty of use cases and attributes (permissionlessness, immutability, zero-trust sources, etc.), and of course, not always all of these count all the time or are even desired. But it allows us to have and apply those as needed in an interoperable way.
But why do you think that its permissionless and zero-trust properties allow blockchain technology in particular to "bring humanity closer and make it more efficient in many ways", better than other technologies can? In other words, why are these properties so important that a blockchain is to an append-only DB as an append-only DB is to pen and paper, by your own analogy?
> If an artist sells his art the first time for $10, and the person resells it for 10000$, then the artist should be compensated too.
This is far from axiomatic[1].
Also, presumably you can move up a level of abstraction and sell the identity that bought the artwork for $10000. The blockchain doesn't need to know that the keys have changed hands.
> we've found value in digital things and may, thus, call them assets: e.g., data, media, and information/knowledge
> We have no way to deal with digital assets
Are you writing an ad for a new crypto platform that is definitely not a scam?
There are literally people on the Internet who are able to deal with data, media, information and knowledge without ever touching crypto. Amazing, right?
> What applications of blockchain do you envision?
"digital store of value" which is: not controlled by any centralized entity and thus immune to corruption of the said entity, easily transferable, fungible, easy to divide into sub-units. I have compiled various usage examples of such a technology here[1], but primarily it boils down to "shitty governments", which covers a vast portion of humanity.
Traditionally, this was Gold but BTC is better at transfers than Gold. Maintenance burden is lighter for BTC on the one hand because you just have to memorize 12 words, but it is also susceptible to hacks on the other hand compared to Gold.
Gold market cap is >12T$, which is nowhere close to its actual intrinsic value. A lot of that market cap is due to the collective myth we have bought into that Gold is a store of value.
If you don't see that, then probably you also won't be able to see the usecase of BTC. Moreover, if you do not see a need for a store of value in general (which is totally based on collective myths and less so on actual intrinsic values), then you are probably in a cute bubble somewhere.
I have yet to see an application of crypto where it’s not just solving a solved problem in a more convoluted manner. We have had digital certificates for decades which works efficiently to establish validation through digital signatures. Most use cases presented by blockchain enthusiasts competes with solutions based off of simple digital signatures.
I have compiled a list of BTC usecases here[1]. Can you please provide me an already available alternative for those examples, which is clearly superior to BTC?
So maybe we're going to see actually useful applications? Until now, it's unclear if there were any because anything that wasn't a ponzi scheme was drowned under the lure of free money.
I still don’t think we’ve seen many good use cases. If people were being honest they would know that crypto was propped up initially by the drug trade and largely continues to be.
There might be a killer application down the road but investing in AI is so much more useful to humanity
The difference is my mom uses e2e encryption to check her emails and sell jewelry on etsy.
She's never used BTC to buy anything. Outside of a few tech bros in SF or Austin no one is buying houses in BTC.
I don't know a single person on either coast or in any city that has used BTC to directly buy groceries; pretty much everyone I know has used e2e encryption to buy something off of Amazon.
This claim was made often early on, without any supporting evidence. Because the network and userbase was smaller it was more plausible. Now it's substantially larger, and industry has developed within it.
So what's honest about claiming that it was or continues to be without any data?
Even if you decided to go out and attempt to gather this data (good luck), why does this matter? How much impact to the USD do you think there would be if all illegal drug trade stopped tomorrow?
There are a bunch of estimates on this, and I would say based on what we've seen lately with FTX that there is likely an even larger amount of fraud in the system than is known. Yes the USD is also used for illicit activity, but thats just cash, and we actively try to stop it.
Agree about FTX, but much of it was unsurprising to those paying attention, and that wasn't merely fraud about Crypto, that was an epic failure on the part of a few of the world's preeminent investors.
>but thats just cash
I'm not sure what you mean by this, can you elaborate? Every estimate I've found is very poor quality data, and I'm happy to pick apart any. It's similar to the energy use estimates which are equally poor and often miss vital distinctions.
- Working with companies everywhere in the world, as the bureaucracy of setting up the monetary relationships for, say, a Ukrainian immigrant residing in Poland willing to work for a US-based entity, is prohibitive;
- Targeted high-impact donations for Ukraine;
- Basically everything where the official way of doing is too slow or where there is too much red tape.
Crypto donations to Ukraine were a rounding error, and done seemingly more for the purposes of mounting another crypto stunt than actually helping people.
There was little crypto fraud this year, other than the usual hacks. All the big stories were good old regular fraud by centralized companies that you also see in the fintech space. None of this was enabled by crypto. The problem is that most people don't understand the difference. It was just fraud, not crypto fraud. It's like saying that Theranos is "blood test fraud" and thus we should ban all blood testing. The fact that some founder scammed customers and investors has nothing to do with the market.
A lot of the fraud that happened in crypto this last year would have been prevented by regulators in the standard markets. Sometimes regulations are bad and unnecessary, but a lot of time they are there for a reason. The crypto crowd seems to have take the opinion that all regulation is bad
Don't forget moving huge quantities of money out of Saudi (after MBS took over), Russia, China (after Xi's anti-corruption efforts), Brazil, and India.
The price of BTC tracks with MBS and Xi's moves, too. Also correlates with housing prices in Vancouver, BC.
I’ve scrolled through all the graphs but this question is never answered. I’m not knowledgeable enough to interpret the data.
So I can only express my sincere hope that it is true. I think crypto is a blight on our societies and has caused tremendous damage and suffering for those who were too trusting, desperate (or both) and lost.
I was somewhat surprised to see that bitcoin’s value has risen quite a bit recently. But then again, this is a space in which people do all that is normally forbidden (like wash trading) to try and get the number go up.
I personally believe crypto was never even alive to begin with in a legal/moral sense, but maybe that’s just me.
The graphs show that, with the possible exception of the Centralized exchanges, there's more revenue out than in. On the protocol level (though I didn't see the Centralized exchange protocols in the graphs), on the Decentralized exchange level, etcetera.
Basically all of crypto except the goldpan and pickaxe sellers, and some rare gold miners and gold traders, are as deeply in the red as Charlie Javice's startups.
Not mentioned in the article of graphs is that if this ever isn't the case it becomes more and more likely that a Sybil attack would become worthwhile. To protect against a Sybil attack you need to keep the value of the coins needed for a Sybil attack at greater than the total value of each protocol. I guess this is also the case for regular companies, with P/E greater than 1, and a marketcap greater than the liquidation (not enterprise) value of the company.
But it also means that people can't all cash out at once, only at a trickle. For publicly held companies a larger company, or a billionaire, can buy out all shareholders at the current share price. But for crypto most of the value of the coins or tokens are that other people are willing to buy them at the current price. If someone buys out all of the tokens for a protocol it automatically loses its value. If crypto ever is used primarily as a currency maybe you don't need to cash out, but that's a big IF.
These charts showed me that publicly held crypto really is a ponzi-like scheme.
I think the original author's point is that there is still quite a bit of activity and apparent unique users on most of the protocols. However I'm not sure how they validate that apparent users are actual users. Regardless, the actual activity isn't being faked as long as the blockchains are functioning as blockchains. So at a minimum you're still getting a certain amount of fees (in terms of internal crypto tokens) generated daily for the protocols.
> For publicly held companies a larger company, or a billionaire, can buy out all shareholders at the current share price.
That's not accurate, most shareholders aren't selling at the current price (or this price would be lower), that's why buying another company means paying a premium over the current share price.
They're conveniently zoomed all the way out on their graphs. Scrolling down to the DAUs, developer count and overall revenue (at the bottom btw), it's pretty obvious that things have shifted downward since September.
I get that this is supposed to be one of those 'draw your own conclusions' articles, but it doesn't really work when there's such a sharp short-term loss at the end of the bubble.
Look. I don't love it or hate it; not an evangelist or anything. 99% of what you see calling it a scam is accurate.
But once that all shakes out -- I still think it's just getting started. The use cases aren't what a lot of people thought they would be -- but the ones that are actually useful are doing fine, and the world of "all the other money" is in such a bad state that I can't help but see some form of widespread adoption as completely inevitable.
Having felt this for a while (and then jumping off the bandwagon in ~2017), I feel like Crypto's dream of a 'money protocol' has been perverted too far to touch. Go figure, introducing money into a democratic system incentivizes the wrong things.
Maybe things will shake out differently in the future, but there's not a chance in hell that a money API gets made without some form of regulation or profiteering. Goodwill alone is not enough to drive a bartering system, as proven by the disaster that is crypto's overall price instability and corresponding 'stablecoin' corruption.
"API" is a funny term to use here, considering that APIs are always "permission based," borderline political. Crypto is designed to be somewhat of the opposite of that idea.
Anyway, I think the real use case isn't "day to day transactions," it's better "money in a mattress." along with a staking/savings instrument.
No, I don't think so. I think it's not dead yet, but it's definitely stalling.
On the tech side, it seems to be stagnating. Bitcoin is still the most popular one, and it's stopped improving. The capacity is fixed, the use for normal people is not really there, adoption has gone backwards.
Things like NFTs have been a temporary boon, but then didn't quite work.
For the big players, there seem to be daily scandals and bankruptcies. It's becoming clear that many of them were barely hanging by a thread, and many have complete morons in charge. They're also being targeted by law enforcement.
On the public side, I think it's peaked. Crypto got advertised more or less everywhere and nobody really cared. By now pretty much who was going to get into it already has, and there's not much more room to expand into.
I always find takes likes this super weird and conclusory given that there's a LOT of revolutionary tech that nonetheless takes forever to catch on, especially one that threatens to disrupt big incumbents. The fax machine was invented in, what, the 1800s?
Revolutionary tech gets packaged in some user friendly form for non-experts. A smartphone is chock full of amazing tech but is reasonably user friendly to use, to the point that pretty much everyone has one. Crypto isn't really like that. The real stuff is deeply technical. The simplified stuff (eg, storing your coins at an exchange) loses the entire point of crypto.
It also solves problems people have. Crypto aims at a very narrow, very ideological set of problems that the vast majority of people doesn't really need solving. Its tradeoffs only make sense if those are real problems you have.
Eg, if you're a drug dealer the lack of customer service or law that can rescue you from your errors isn't a problem. The law is your enemy anyway, so you already made peace with that if somebody steals from you, going to the police isn't an option.
Having a normal person put all their life's savings into crypto on the other hand is an absolutely terrible idea. Anyone doing that is risking a single error or a single bug ruining their life with next to zero chance of recovery.
"Life's savings" is disingenuous though. No one puts their life savings in much of anything.
Moreover, what you're saying about crypto presumes that its competitors are all high-quality,and what I'm saying is there are likely enough low-quality competitors such that crypto becomes more attractive. Life-savings would be stupid. But part of an investment strategy on the other hand potentially makes a ton of sense, and that's all that's needed for survival/popularity.
> Moreover, what you're saying about crypto presumes that its competitors are all high-quality,and what I'm saying is there are likely enough low-quality competitors such that crypto becomes more attractive.
What is lower quality out there than crypto? Crypto is appallingly low quality. Crypto-related businesses like exchanges go bust dramatically at an alarming rate. If your bank goes bust at least there's insurance for that.
> But part of an investment strategy on the other hand potentially makes a ton of sense, and that's all that's needed for survival/popularity.
But that comes back to the original problem: it's only a good investment if you can keep it safe, AND if it keeps on growing. Keeping safe in the space is an extremely difficult task as it is, as every wallet out there is a self-awarding bug bounty.
As to growth it comes back to what I was saying before. First, there has to be increased value for it to grow. That's actually decreasing as crypto becomes more trackable and less safe for illegal activity over time.
It's also at best a zero sum. Any money you get from such an investment can only come from the traditional economical system putting it in, and that just can't go on forever. And any gain you might make comes from somebody else's loss. You're just betting on that you won't be somebody else's gain.
Sure, safety's difficult -- but precisely because its the exact same issue as cryptography. Your point about bug bounties is a perfect example of antifragility -- and cryptos success in this regard is far more interesting than its failures (none of which have been fundamental to the concept)
Increased value. Again, no different from any other financial instrument in any fundamental way. Every criticism you can make of crypto, you can make of bonds, etc. The zero-sum argument is especially bad in this regard.
> Sure, safety's difficult -- but precisely because its the exact same issue as cryptography. Your point about bug bounties is a perfect example of antifragility -- and cryptos success in this regard is far more interesting than its failures (none of which have been fundamental to the concept)
I don't where's the antifragility -- it's exactly the reverse, crypto systems are "superfragile". An online wallet is a juicy target for an attack every second it exists, and the moment defenses fail the result is catastrophic. It's even worse with modern crypto features like NFTs -- which require online wallets and have you actively advertise to everyone how much money there is.
> Increased value. Again, no different from any other financial instrument in any fundamental way. Every criticism you can make of crypto, you can make of bonds, etc. The zero-sum argument is especially bad in this regard.
For pretty much every crypto concept there exists a non-crypto analog that's far more useful friendly and safer to work with. The question is why would crypto see increased adoption when to most people crypto doesn't have good tradeoffs.
So if I wanted to make money from bonds, I'd just buy bonds. I'd need to be nuts to opt into the crypto equivalent.
But, to absolutely steal the originators example -- the "superfragility" of crypto systems is the same as the superfragility of individual NYC restaurants; aka the precise reason NYC restaurants GENERALLY are so good. I agree, a ton of them will die. And also - the thing(s) that's left will be unstoppable.
As for the second one, I mean, risk/return. Yes, other things will be more user-friendly and safer, which likely means lower return.
I agree, you'd be nuts to throw a lot in. I just also think you'd be nuts to not throw a little in as well.
> But, to absolutely steal the originators example -- the "superfragility" of crypto systems is the same as the superfragility of individual NYC restaurants
What? That's not at all what I was talking about. I was talking about fragility for the user.
When I buy something online even at a new and kinda dubiously run place, I'm only risking the $50 or whatnot I put in, and even then I can do a chargeback. And all the site knows is that John Smith spent $50 on their stuff.
When I interact with crypto, I need an online wallet, which means everything and everyone knows what's the balance in it, and how much cash they'll get if they succeed in finding a bug, or an exploit, or to trick me into revealing my key, or they trick me into allowing more access to my wallet than I should. And then I'm not out of $50, I'm out of everything, and there's no recovery possible.
That's what I mean by "superfragile". Crypto needs you to do everything right, consistently, forever, or the results of a lapse in security that somebody succeeds in taking advantage of are catastrophic.
> I agree, you'd be nuts to throw a lot in. I just also think you'd be nuts to not throw a little in as well.
The era of crazy gains when somebody spent $5 on a lark and ended up with $500K is long over. Look at the stats. In modern times if you're really, really lucky you can double your money. But doubling $5 is insignificant. You need to risk a lot for the gain to actually be significant.
Crypto's raison d'etre is being a decentralized system without any central authority. That requires you to be your own bank.
For most people that's just not a good tradeoff. There's no good reason why buying a coffee should expose me to a risk of losing all my money with zero recourse. That's a tradeoff that only makes sense for a small segment of people, eg, drug dealers who can't get any help from the normal system anyway.
But if you fix those issues by delegating that work you're just using Coinbase or whoever as an alternative to Paypal. Yeah, technically that works but you get none of the perks crypto is supposed to provide and at that point even Paypal is a more stable place with less drama. This is because even if your interface resembles traditional systems a crypto exchange is still linked to all the instability, drama and chaos of the crypto space.
Bitcoin is 14 years old and unlike aviation isn't getting any safer because the difficulty of dealing with it is inherent to the space. The whole point of it is that there's no central party in control who can force your hand, which equally means the lack of a central party in control to rescue you from your mistakes.
Bitcoin “crashed” to a market cap of 440 billion USD.
It is valued more than the vast majority of publicly traded companies.
From that measure alone, why should anyone think “it’s dead”?
Bitcoin ain’t tulips, ain’t the pets.com, etc, to think something that is 14 years old and valued at 440 billion is going to die anytime soon seems…so wrong
How could something be worth 440 billion in market cap after a major correction not be valuable?
This is after having a 14 year history of people learning about it, not some scam coin like LUNA that went from zero to 40 billion and to zero in less than 1 year
For the simple reason that market corrections are not absolutes: the only thing that a correction down to 440B tells us is that it hasn’t been corrected down to 0 yet.
It may never be, but that’s just to say that “it’s still valued” is not a good argument for “it’s correctly valued.”
If I take 80 Dollars from you and promise to return you 50, is this operation also worth 50 Dollars? If so, what‘s the meaning of „worth“?
If I open a bank account and someone else deposits 1 billion there and I have a contract that obliges me to return the money in a year and I am not allowed to move it or use it as a security, is my bank account or the bank creating it „worth“ 1 billion?
Whether bitcoin is worth something as a tool/currency cannot be measured well by the amount of money stored in it.
I mean, not to defend Bitcoin, but if you have invested at $60 and sold at $60K - it has provided tremendous value. Most people are going to lose money on this “investment”, but just saying that it provides no value at all is a tired argument.
This is nihilistic value: the “value” of Bitcoin seems to be latent not in its productive capacity, but in its ability to extract value from other people. Which is to say that it has the same value that a credit card skimmer does, and that that is not a useful definition of “value.”
It’s a good argument. I don’t fully agree we should limit the definition of value to only its (subjectively) productive quality. It’s like gambling - I personally don’t see value in it but, hey, many people love it so they get something from it.
I said nothing about Bitcoin, only about your argument. Responding to an argument requires reading it first, which is a bit more skilled than just knee-jerk reactions.
If crypto is going to be regulated all fees need to come out of taxes from crypto earnings. Otherwise it isn't paying its way. And since it isn't creating general goods for the broader market, the taxes of the broader market shouldn't be expected to cover it.
> From that measure alone, why should anyone think “it’s dead”?
Because everyone is waiting to exhume it when it's worth something. Bitcoin has no utility, which is not a knock against it's implementation but it is an ill-omen for it's value. The concept of 'digital gold' only works if the gold is inherently worth something. Owning a piece of a blockchain that's too expensive to transact on is a detriment, not a positive.
Not to insinuate there's some 'better investment' though. Crypto is dead because the dream of democratized currency hit the mainstream and got rejected, big-time. Use it if you want, invest for however long you'd like, but you should make peace with the fact that a crypto future is nothing more than opportunistic ankle-biting.
It's not Berkshire Hathaway, Bitcoin's "test of time" was 3 years of media attention that is now coming to a close. Regulation and taxation is disincentivizing people from using it. Exchanges and liquidity holders are being ousted as scammers, it's basically The Reckoning for everyone who promoted a Laissez-faire economy.
I love the idea of a democratized currency, but Bitcoin's value is propped up by very little now. As I said before, you cannot run an economy on goodwill alone. Someone's getting fooled into holding the bag, and the longer you hold out for a payday, the greater the chance that fool is you.
That a whole decade more for people to learn about it, and especially since the main features has not changed. Yes, there are improvements to the protocol, but the main thing has changed little over the years
Betting on the stability of a protocol is a good way to lose your money when that protocol is obsoleted.
Edit: I'm coming right out and saying it; if we even have to talk about L2 chains, you might as well just admit that Bitcoin itself needs an update to be usable.
Paper cash was an innovation to solve the issue that gold is hard to lug around. And very much an analogy of a L2 network
It is arguably easier to counterfeit than gold (there is fools gold too…)
The base layer is very secure. L2s will be faster, but have a trade off of being less secure.
Note: the L2 Lightning Network is different than L2s for ETH like POLY, POLY has its own market cap (garbage idea IMO). Lightning is just a tool to make BTC more efficient
See, it's already over. If you have to explain that to a layperson, it's not going to get adopted. Furthermore, if people are taught to adopt this mentality, that puts them at pretty great risk for getting scammed.
Again - do whatever you want and invest wherever you please. But L2 chains are not catapulting crypto back into usability, and Lightning is living evidence that Bitcoin's bet failed. If you need auxiliary technology to transact the money you supposedly own, your protocol is broken to the core and needs replacement.
A democratized currency sounds kind of neat, but bitcoin was never this. It started out as an oligarchical currency with the halvenings (especially spaced the way the were). It became oligarchical at the transaction verification level (the level of taxation) when ASICs were developed for it.
That's only good until enough people get burned so bad they never touch it again. Then it has completely no utility.
Gold has survived as a speculative vehicle because it's been relatively stable over a much longer time period. That, and unlike Bitcoin, gold is actually a physical asset that is not held together by (wasting) electricity.
> How could ANYTHING stand the test of time and be worth 440 billion if it has no utility? Genuine question.
1) markets aren't rational nor are the people in them
2) BTC is a currency but is being treated like a commodity
3) a lot of big orgs, investors, and even governments bought in and now either hold and pray for growth, or else pray it doesn't drop. They have every incentive to hype up its value even though its use for most things is essentially moot; your Mom isn't going to use BTC to buy catfood, and its utility on the dark web is now overshadowed by things like Monero. You HODL and hype cuz otherwise you lose billions.
It's too soon to say it won't fall further. The chart is still very weak. It won't take much for btc fall below 16k again. Another major failure like gemini or greyscale will do it.
Yes, it's worth a lot still, but for most btc investors long-term returns have been bad unless you bought pre-2017. BTC is only up 15% from its 2017 highs (from 19.5k to 22.5k). This lags almost all index funds.
The combined value of oil or copper is worth a lot too, but this does not make it a good investment either.
Maybe all the talk about the death of crypto just reflects where we are in the cycle.
The mood feels similar to late 2018 when most people weren't paying attention at all, and the few who were paying attention were just disgusted by the whole thing.
When the conventional wisdom is that everything from art to sports to real estate will be imminently cryptoized, you know it's frothy, and near the top of the cycle.
When the conventional wisdom is revulsion and disgust then maybe we're another six to eight months away from not thinking about it at all, which is probably the bottom of the cycle.
My argument is that $10B of Bitcoin isn’t worth anywhere near that.
You can’t sell it without crashing the market, and you probably can’t borrow multiple billions of cash against it either because nobody in the crypto ecosystem has that kind of liquidity anymore. I’m open to be proven wrong by evidence.
Argument from ignorance fallacy. I'd love to prove you wrong, but the fact is that it is impossible to prove.
My own experience says that there is a lot more money out there than anyone can ever hope of comprehending. A good portion of that money belongs to people who are never seen. Not everyone tries to be a public figure. Not everyone is in the US. I just saw a video of a G-Wagon in Saigon (~$650k)... Vietnam is a very poor country on the outside, but you'd be astonished how much money people have there.
The amount of money in crypto is staggering. I know of people who started mining ETH from day one... and didn't stop. I can only imagine their wealth. It would be easy for them to sell off chunks over the last 4 years without anyone noticing.
Needless to say, I'm sure that if someone wanted to get rid of it, they could. It might take some time and effort, but when you have god levels of money, all you have is time.
I feel like you and I are actually arguing the same thing. A lot of people in crypto are obviously crypto-rich and have been converting to cash over the years to buy those fancy cars and penthouses.
So who's left buying today? Retail frenzy brought the fresh dollars but it's dried up. Those crypto-millionaires don't need to convert their cash back to crypto. They own enough crypto already, and (as you describe) they went through an effort to build cash positions, so why revert that... So where does the $10 billion in cash come from?
I know that institutions and high net worth individuals (hnwi) are quietly buying. There are companies like attestant.io who are staking ETH for (hnwi).
> Retail frenzy brought the fresh dollars but it's dried up.
For now. Being in the industry myself, I've had a saying for years, like it or not... magic internet money always goes back up. I feel like you're just looking at one blip in 13 years of blips, throwing up your hands and saying game over. That's like saying after the dot-com bubble bursting, that tech would never go up again.
You can definitely bet that people are buying the dip. It is starting to show in the recent upward price movement too. 20%+ gains in a few weeks are not small.
You don't necessarily need a bank for that; DeFi platforms like Aave can provide the equivalent of a margin loan. Looks like the current (variable) APY for WBTC is 1.11%.
Staking pool or outright staking? Lots of people mined before the hardware got sophisticated enough to price out the smaller miners. Even so, there were still people mining on GPUs. Do you remember when gamers and ML researchers were priced out of GPUs?
I am of the view that in general, lowering inflation is a good thing.
Given the success of PoS so far (1), ETH was over paying for security when there was another alternative way to do things... and this is coming from an ex-large scale miner.
(1) We likely won't know for decades if the switch to PoS was indeed successful, but I do feel it is an interesting experiment
This [1] is worth watching in full. Crypto, to me, has shown three things:
1. Its only use case is bypassing laws;
2. Crypto thrives on desperation and hopelessness. I think more and more people are realizing that their circumstances (or "material conditions" if you prefer) are awful. So many people are bordering on food and housing insecurity. So many people feel like they'll never "get ahead". Everyone saw Bitcoin's meteoric rise and don't want to miss out on the next Bitcoin; and
3. Despite crypto having no use cases and being a giant Ponzi scheme, it's amazing how long something can persist when people want it to be true.
So is it dead? Not yet. It may never die. But it should. It's worth noting Weaver's Iron Law of Blockchain [2]
> When somebody says you can solve X with blockchain, they don’t understand X, and you can ignore them.
I'll also note that apparently the Bitcoin network used 200TWh in 2022. It came up in another thread the other day that Google in 2020 used 15TWh. Now compare the utility.
> According to VISA corporate responsibility and sustainability report in 2017, the company consumed a total amount of 680,560 GigaJoules of energy globally for all its operations (1). We also know VISA processed 111.2 billion transactions in 2017 (2). Rely on these numbers, VISA ECPT is 0.0017 kilowatt-hours and for simplification 100,000 VISA transactions consume 170 kWh.
680,000 GJ is roughly 190GWh (0.1%).
But it gets worse. In 2017 Visa executed ~111B transactions. Bitcoin peaks at about ~90M. So 1000x the energy for 1/1000 of the transaction volume. So each Bitcoin transaction uses ~1,000,000 times the energy of a Visa transaction.
Excellent. Most people and resources sited on this Machiavellian capitalist mega-bro site often disagree with me. I take it as a compliment. It’s a positive sign I’m on to something sustainable and worth investing my time into. Thanks for helping me smile today.
These metrics do not mean anything in the context of investing. The protocol is not going anywhere, but so what. This does not mean it's a good investment. Developer counts, push requests, etc...these metrics are easily inflated, such as due to churn volume or making tiny or trivial modifications to code.
AI is the use case blockchain didn't know it was looking for.
The exaflod of content and deep fakes, etc. that's coming towards everyone soon will require some sort of trust protocol, blockchain is great for that.
With regards to crypto specifically microscopic payments will be needed to allow for adding cost to a lot of the things that are currently "free" now that AI content creation is going to overwhelm all of us.
> The exaflod of content and deep fakes, etc. that's coming towards everyone soon will require some sort of trust protocol, blockchain is great for that.
No it isn't. Blockchains have no solution to the oracle problem. A blockchain is useless for distinguishing AI-generated content from other content for the same reason a blockchain is useless for managing mortgages on real property.
But there is a solution to the trusted protocol problem by only trusting content created through transformers as you will be able to see the intent it was created with.
> "The exaflod of content and deep fakes, etc. that's coming towards everyone soon will require some sort of trust protocol, blockchain is great for that."
I don't see how this is the case. Any blockchain verification is one off, and limited to the chain it is on. I, and many other people, would probably more trust a variety of centralized claims to truth or trust, than a decentralized claim. You trust when multiple parties state how they verified, you don't trust when one party writes "this is true" to a decentralized service, without all of the evidence they used to verify as true.
Crypto, except transactions on centralized exchanges, is hideous for microscopic payments. It costs too much to verify even minimal transactions on chain (even more for contracts). It's a lot, lot cheaper to use a centralized service for minimal transactions.
AI creates all the content and the output gets put on the blockchain. I can now see what the intent was when it was created and if it wasn't created via an AI.
As a user that's the most secure way to interact with any content.
Maybe, but either you don't need to buy any tokens to interact with the content. Or you have no guarantee beforehand (minus a prohibitive chain analysis) that what you're interacting with won't rip you off.
Also an AI (or a person hacking the AI or its data stream) could just as easily copy something that's non-AI generated and publish it to the chain as the AIs own creation. If this something came from a private source there might not be any way to verify the original creator.
So this really only works for full verification if literally every bit of information of a kind (or at least its hash) is placed into the blockchain in real time, and the calculations generating the information and data streams placing the information into the chain are transaction-secured along their entire route to the chain. This becomes a tax on everyone, for the benefit of a few.
I don't need to know who the original creator is, I just need the smart contract or smart agent be created via an LLM then I will know exactly with what intent it was created and whether to trust it or not. It's literally written in plain english.
It's not obvious I know, but once you accept the idea that LLMs will become the tool we create with (and tokenize) and that smart agents becomes the mediators then you realize that there is in fact a way to allow for this and that blockchain is going to be fundamental.
In fact if it's not created via an LLM on the blockchain we know we have to be much more careful.
Thing is, I'm rather neutral to it, though for years I'm getting bombarded with ponzi-like BS in Feeds, Meetups, articles and other public occasions.
That's a shame because it contaminates everything around it. I'm pretty sure it would make sense for a tax authority to infrequently poll the head of a hash-chain of a businesses' bookkeeping process to avoid the (at least in Germany) stupid manual process that it is now. But the whole crypto bro smell around that makes me very reluctant even exploring this direction.
That doesn't really need the multiparty aspects of a blockchain though, you can solve that with just cryptography. (Indeed in Germany digital cashier machines etc already need to store such logs and print the transaction checksum etc on receipts - just storing that online instead of on the device is currently not common)
I was deliberately talking about a hash-chain and not about blockchain. Point is, if they infrequently collect the head's hash, the tax audit consists of just a recalculation. That could be a first step. If they then would somehow (like you mentioned) provide a service for providing authenticity of receipts, they'd have a system that works better than what they have now with much less work. Am I missing sth?
That it's not really relevant to discussion of "crypto" in the sense used here, and that this logging already exists and is the law? The checking obviously still needs to be done, and since people generally dont get receipts digitally requires some manual work.
Nevertheless, I feel the initial hype of making quick money from Crypto has definitely died, because many lost money in the Crypto bull market.
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