The fact that network effects to some extent works in the wrong direction for this technology is concerning. What happens when the current speculative cycle comes to an end and crypto needs to justify itself by its utility to end-users as opposed to investors?
P.S. Beside this point but one thing that can work in favor of crypto is the conflation of investors & users. You essentially get so many evangelicals for your project from the investment perspective "for free". If you can turn them to users, then you are in a nice shape. Though issue is that most these investors are only summertime soldiers.
Cryptocurrency is a vital component of the distributed blockchain architecture. It provides the decentralized economic layer, without which blockchains would be centralized by virtue of their dependence on a centralized payment processor.
You know this, but many users of AOL didn't. To them, AOL was equal to the internet, like many people believe that cryptocurrency is the only application of blockchains as a data structure.
> Cryptocurrency is a vital component of the distributed blockchain architecture.
It is now, but that doesn't necessarily have to be the case. Cryptocurrency is one of many applications that can be built on top of a distributed ledger. There are many applications that have nothing to do with payment processing.
I disagree with the notion that a cryptocurrency is a vital property of the distributed nature of blockchains. The purpose they serve now is to incentivize individuals to participate in the network who wouldn't otherwise participate by paying them a currency to represent the value of the service they've provided.
But for instance, you could also have private blockchains where the incentive for running a node is access to that blockchain's data. There does have to be an incentive to run nodes, but it doesn't necessarily have to be monetary.
That's not a decentralized blockchain. It's the decentralized consensus that is novel. Without decentralization, it's just an append only database.
As for compensation, rather than receiving a coin as a reward for doing proof of work mining, you would gain a key to enable you to read certain encrypted data on the blockchain, for instance.
And your scheme does require some amount of trust. Induction into the consensus node set would need to be controlled to prevent bad actors from disrupting the flow.
This is not a property these systems possess. The computational power of the system remains is bounded by the computational power of weakest full-node.
You must have hung out with a nerdier crowd than I did :) I was the only person I knew who owned a personal computer until well into the late 90s.
> The reason I've become a bear on cryptocurrency is that I don't see the utility to justify the monstrous amounts of money pouring into it. It's almost 10 years old and today it's actually less useful than it was a few years ago due to runaway fee growth.
So I think cryptocurrency here is getting conflated with the underlying technology, just like Geocities came to be the poster child of the early web. I agree with you that the current systems have much work to be done, and that many of them will be abandoned before they're fixed. But cryptocurrency is not the blockchain anymore than gopher was the internet. Services like Bitcoin built on blockchains may cease to exist in their current state, but just like we still have TCP/IP, I think the blockchain piece will be essential moving forward.
> That and I see a ton of scams. Almost all cryptocurrency projects seem like either scams or delusional vaporware projects akin to badly thought out Kickstarters or over-funded boil-the-ocean startups. These things rarely accomplish anything other than to blow a lot of money.
I get a lot of scams via postal mail, telephone, and the email, but that doesn't negate the purpose of the technology :)
> Want to change my mind? Show me the cryptocurrency killer app that people are climbing over each other to use.
I think you misunderstand my viewpoint. I don't think the technologies of today are the solutions anymore than Geocities was the be-all-end-all of the web. My comments are more directed toward those who believe this technology leads to a dead end and that reducing the reliance on third party trust is not a problem that needs to be worked on.