Ethereum is certainly more interesting than Bitcoin but the use cases so far seem to be more speculation.
I think people can quickly get dissuaded by some negatives like lack of scaling or environmental issues. These are real but are being solved. We really need communities like HN to engage because if proponents are right then the change will be vast and we are unprepared.
My personal favorite outcome is playing out right now. When a tech company is successful they capture near 100% of the value, despite leeching content off users. Ethereum based projects generally share rewards with the community of users that make the protocol/network successful. Applications are forkable, not just the code but the community, too. The community is in control.
With the early internet it was easy enough to see there were use cases like “instantly send a letter to someone across the world” or “order a book not stocked at your local store” or “go directly to Nintendo’s website and read their info”. I remember doing this last one as a kid in the library and was instantly taken with the internet.
What are some similar ELI5 use cases of the Ethereum chain and those names you mention? Other than intra crypto loans, derivatives etc
Liquidity for things that don't normally have liquidity.
Example: like wrapped Bitcoin, you could create wrapped Wine. Say you've got $1 million in a wine cellar. Create a wrapped token which allows you to use it as collateral or provide it to a liquidity pool to generate revenue.
Now your wine is earning you interest. Something like this may already exist...
Same for Tesla stock above. Now that a TSLA token exists you could provide to a pool for interest since it doesn't pay a dividend.
Explain further. Why would you be able to have the benefits of owning wine or TSLS and also earn interest on it. That’s your cake and eating it too.
There must be a risk element to the liquidity pool. What risk exposure are you taking by depositing TSLA stock there that you can’t get through normal finance?
https://www.businessinsider.com/goldman-accepted-fine-wine-a...
Not a real problem. Any civilized country has solved identity already.
> DAOs
A solution in search of a problem
> NFTs
Speculative. Game items, land registries and deeds are a solved problem. If your jurisdiction/company hasn't solved them already with Postgres and hardcopy it's because it's not interested in solving it or it's not a real problem, just a minor annoyance.
Even if they might do things better (which I don't see that happening; solutions are objectively slower and more cumbersome than centralized databases with audit logging), they appear to solve "problems" that aren't really problems.
There's a lot of things that classify as annoyances and inconveniences in the world. That doesn't mean that I'm willing to dump a boatload of cash to solve them.
Identity isn't currently a technological issue. Microtransactions aren't a technological issue solved by blockchains. Ledgers of most things in general don't have a trust issue that's solved by blockchains.
Technies being techies think that technology solves a lot of issues just by existing while completely discounting the issues of trust and control in institutions themselves.
Most blockchain problems are actually governance issues.
The early internet immediately allowed people to do cool stuff that was explainable if someone had a moderately open mind. If wasn’t vaporware.
"Just imagine all those possibilities."
"It may not be there yet, but the smartest minds are working together on it."
"How can you not see what the importance of this new infrastructure?"
"DAOs, NFTs, [insert new useless crypto tech of the day]"
If, just once, they could just provide a single real use case that would actually improve my life... I get it, crypto is great for buying drugs on the internet, money laundering, riding the hype train, speculative investment, and so on. But I just have never seen any real legitimate use case that would benefit from crypto.
Jesus Christ. So the only problems that matter are the ones in "civilized" countries? What does that even mean?
Perhaps I am simply suffering a tragic failure of imagination, but I fail to see how adding a blockchain changes things substantially.
It's not a known problem because each country has its own context. That's like saying US healthcare problem can be solved just by doing what nordic countries do.
I'm not arguing for blockchain.
I hope that will never happen. We really don't need anyone to end up in a situation where a key is lost and they can neither prove they own something nor sell it legally. Also, "transfer your home by mistake" scams. And have fun trying to figure out how to deal with dead owners.
Husband and wife divorce and the courts rule that the husband gets the deed to the house and the wife gets the Ferrari. Husband refuses to transfer the Ferrari's deed. Now what?
Unless you mean that the land registry continues to exist but uses a public blockchain as their database? In which case... why? If they did decide they wanted it all public, auditable, and in the open, they could just publish it as a signed text file every day and anyone who cared could mirror it.
Don't get me wrong, I think there's some really cool possibilities in the space, but lots of the things that get proposed are fundamentally subject to court orders. Unless we change the law so that judges can't say "I don't give a shit what the 'blockchain' says, A belongs to X and B belongs to Y, and anyone who won't play ball can sit in jail for contempt until they get on board," there won't be much point in keeping track of those assets on a blockchain.
Court systems, even traditional ones, can interact with Ethereum. At the end of the day, Ethereum is just a ledger. We humans are the ones that enforce laws and social contracts, Ethereum just helps with the (automated) bookkeeping.
Also laws change. What you signed in an ETH contract today may be completely different than what's legal / possible to enforce tomorrow.
If a law changes and affects an on-chain asset, then that logic will need to be reflected on-chain, otherwise the involved parties won't come to agreement in the real world. There are ways to make contracts upgradeable on Ethereum while still preventing someone from stealing funds, like through a multi sig wallet, perhaps with lawyers holding some of those keys. It all depends on how it's structured, but the benefits of using Ethereum (or something like it) are clear.
How is an automated ethereum contract going to lend it out and ensure its return in good working order, or pursue damages if it is not?
Say my asset is actually just a lump sum of regular US dollars, which I would very much desire to be returned to me as US dollars plus interest so I can my US taxes with them at a later date. How is an ethereum contract going to actually ensure I get my US dollars back, or have resource to pursue them, seeing as how no mechanisms of US dollars are dependent on ethereum?
There are stablecoins backed by USD reserves, like USDC. Again, the ethereum contract is only a ledger. The people responsible for giving you USD is going to be Gemini who control the supply of USDC. You having proof that you own USDC allows you to withdraw USD.
There are of course stablecoins that are not backed by USD, but rather backed by ETH directly and the USD peg is maintained through arbitrage, oracles and control systems implemented in the contracts.
How does the delivery and return of my USD work?
At every junction the answer is "well you trust another party and..." - so why is ethereum needed in the process at all? All of this is just companies providing an API for a service (which generally they don't, now, because it's complicated to orchestrate such a thing).
Ethereum is not contributing anything useful here, because everything important is "trust this person" - at which point I'm really just "hiring a lawyer".
The GP is describing a system kind of like Zipcar - you go online, you enter payment, and Zipcar allows your card to operate a car for a period of time. So, you might say, so what, we already have a Zipcar, why replace it with the blockchain?
Because if Zipcar goes out of business, all the cards and hardware on Zipcar cars are defunct. If all the hardware talks to contracts on Ethereum, there's no Zipcar to go out of business - you buy the hardware once, but the operation of the system happens on Ethereum, not in Zipcars' SQL database.
This still depends on trust. The blockchain doesn’t verify the backing. And USDC’s attestation is rather late.
- Pseudonymous Transactions - Multiple Accounts - International Transfers - Customization (smart contracts) - Micro Payments / Internet money - Privacy - Low entry (Phone, internet) - Peer 2 Peer and decentralized - Free Software - Programmable
No, you don't. The eth contact can control ownership of and permissions to the Filecoin files.
> Eth network can be banned too
Banning the entire network is different than granular censorship of individual files
> And LE or govs see who to target too.
Anonymity is also different from censorship.
You are talking about a lot of adjacencies and "what-abouts"... There are at least half a dozen projects in this vein at the moment, so I'll kindly leave the rest as an exercise to the reader
Anonymity is different from censorship, but censorship is trivial in networks where you ask "who has this file" and everyone points at the actual nodes which store it, with public IP addresses.
- Multiple Accounts
- International Transfers
- Customization (smart contracts)
- Micro Payments / Internet money
- Low entry (Phone, internet)
- Peer 2 Peer and decentralized
- Free Software
Not really tech problems; you're bound to the limits of the law
> International Transfers
Not a tech problem; international trx are dropping in price as competition increases; tech doesn't change anything here.
> Micro Payments / Internet money
There is no way to scale the tech to the volume where it makes sense for microtransactions.
I'm not really seeing these as problems fundamentally limited by technology.
Isn't eth terrible at this? i have $12 USDT stuck on an eth address because i need to spent $30 worth of eth to send it. That's not even including the fee I'll incur when i have to send eth to the address to fund it..
Buying something without a credit card online.
* For one, Bitcoin can do this too (though not in many places)
* For two, you can’t do it in many places
* For three, you already can buy online with paypal, prepaid debit/credit, and other checkout solutions, for less fees. You can buy a prepaid credit card useable online in any convenience store for a low fee....
I don’t think this is what OP meant.
I mean, we've had a decades of cryptocurrency and just one actual application has arisen - crime. Money laundering, tax evasion, purchasing illegal items, and that sort of thing.
When it comes down to it, cryptocurrencies say that people trust some obscure algorithm that almost none of them could evaluate over society and governments.
It's a bad sign.
Gold has a purpose. Central banks may pretend that gold serves no purpose in a modern economy, but they still hold on to trillions in gold. I hope eventually they'll get around to holding a crypto currency like Bitcoin. They're just upset they don't have a head start in accumulating a reserve.
It's all pretty clear in the settlement Tether signed [1]. Particular note are #17, #20, #36, #43-46
[1] https://ag.ny.gov/sites/default/files/2021.02.17_-_settlemen...
There is a need to have a medium of exchange for trade. Barter has its limitations. For all of history, people have created new forms of money for exchange. The primary characteristics you would need is scarcity, clear ownership, transferability and fungibility. Gold serves this purpose, and Bitcoin even more so.
The fact that gold is a shiny pebble is not adding anything meaningful to the conversation.
The characteristics you need for a medium of exchange are:
- fungibility.
- the ability to hold its value for exactly as long as you need to hold onto it. Any longer than that is a non-goal.
- stability/predictibility.
- the ability to adjust to shocks, and a changing population.
- low cost of transactibility.
Scarcity is a non-goal. Clear ownership is a non-goal except in as much as possession is 9/10th of the law.
Basically none of these apply to gold, and basically none of these apply to bitcoin. That's why nobody uses it as such.
Our fiat money has been around since the 1970s with staggering blowups
Come back to me on 2500 years and we'll see who has the better track record.
For instance, I think it's fair to say e-mail is a success, even though the first postal system was established under Cryus the Great in 550 BCE in Persia. The first e-mail was sent in 1971. Are you saying we won't be able to declare victory on e-mail until the year 4492?
Not the parent's argument, but TECHNICALLY speaking Gold as a shiny pebble can be used for jewelry, wiring, etc. It TECHNICALLY has utility.
Bitcoin has no inherent utility. ETH (and derivatives) on the other hand can power a smart contract which actual real business value, but the fact that it has a currency associated to it is generally meaningless.
This may be a relatively lawless environment, but as for its current atmosphere, blame the world's central banks, not the crypto builders who are mostly as disgusted by the current situation as sidelined observers.
Decentralized networks have the potential to resolve many of the issues we techies love to complain about. Only a tiny percentage of that $2 trillion is allocated to teams actually working on solving these issues (Binance and Coinbase definitely aren't a part of it), so please try to reserve your judgment when you see developments coming out of crypto. Most of it is under-developed, over-hyped, and just an extension of the tech-bubble ponzi, but some of it will actually change the world. In the same way Tesla is actually positive to society overall and we shouldn't shun their cars just because the company's stock is a meme used in zero-sum-game gambling.
I continue to hear this yet I never get a _single_ convincing example from DeFi advocates.
If it can help you imagine some, take the decentralized primitives: a money/value transfer network, a reputation network, a content delivery network.
Starting from those, many currently gimped online services could be replicated in a way that incentivizes behaviors which benefit users, more than the platform owner. Local economies that currently function only through local, unscalable networks of trust could be brought online.
Of course, if you believe everything is better done in a way that can be regulated by a central entity, then crypto as it stands won't do anything for you (although public ledgers do make investigations easier). Core to crypto is a belief that P2P networks are superior to centrally managed ones.
Moreover, trust isn't something mediated by computers. Trust is a question of human societies. Algorithmic trust is not arbiter of trust any more than the thousands of electronic trust schemes, which get gamed at some point or another and where human intervention is necessary for course correction given a measure of authority.
Computer systems aren't outside of human law or common principles of human trust or institutions. BTC and all those other networks are just as if not more vulnerable to being gamed as any other system.
Yes, indeed. That's enough to be useful, they don't need to be better at everything.
> Moreover, trust isn't something mediated by computers. Trust is a question of human societies. Algorithmic trust is not arbiter of trust any more than the thousands of electronic trust schemes, which get gamed at some point or another and where human intervention is necessary for course correction given a measure of authority.
Yes, and P2P/F2F systems allow more human input in networks. Individuals are free to decide with whom to interact or not. This is more humane than letting a blackbox ML model be the arbiter of truth, decide who is a fraudster and should have their account frozen (Paypal), decide who should be silenced (Twitter), ...
> BTC and all those other networks are just as if not more vulnerable to being gamed as any other system.
Great, there's a $1 trillion bounty for when you decide to start gaming BTC.
This. And maybe also that "automatic" processing (enabled by maths) is more efficient and solid than human beings, especially when it relates to trust.
Any "anti-cryptocurrencies" stance has IMHO to state why cryptocurrencies affect him/her author, or anybody else. Stating that it is useless is just an opinion. Many things are judged "useless" by many, let's for example take "billiard": there is AFAIK no solid and widely accepted "anti-billiard" stance. If there is no harm, there is no reason to ban.
Now obviously this is not quite a a reality today. Most things exchanged on Uniswap are crypto tokens, but there are a lot of synthetic assets today, like mTSLA (which is a synthetic share of TSLA) and many more. So now I can hold stocks in my Metamask account today. Sure, it's only price exposure, it's not like TSLA has dividends anyway.
And then there's the oracle problem when it comes to real world assets, but this is solvable with existing legal systems, and soon, crypto legal systems like OpenLaw.
So yeah, Uniswap is my go to example of the power of DeFi.
I'm not sure what world you live in where the biggest problem with buying a six-figure investment instruments is that _I can't do it from my browser_.
There's about a thousand things more important in my mind when it comes to investing. For a day trader this might be a problem. For decades-long instruments it isn't.
All the things you mention have issues that go beyond a browser. You could log on to a real estate page and buy a house and that's technically possible, and digital token doesn't do a damn to improve the experience.
I am a thousand times more likely to run into legal permits issues, KYC and anti-money laundering forms, getting stuck reading contractual obligations that certain assets require, etc.
But it's so much more than that. Have a little imagination. Digital assets could very well be the dominant forms of assets in the future, so easy access to markets to trade these is important.
You just disagree that this has importance, but the market says otherwise, since people are very interested in using Uniswap, and volume will only grow from here. It's undeniable that this is a usecase, and I remember only a couple of years ago that HN would say that Ethereum is completely useless, and yet here we are.
1. While this is technically become realer and realer every day, it's becoming less and less logistically due to regulation.
2. Eventually people will realize that the frictionless experience of crypto is also its greatest security risk[0]. Why do you think the Winklevoss twins store their wallet backup codes in...you guessed it...BANKS! ha.[1]
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.
[0] - https://gist.github.com/chitchcock/1281611
[1] - https://www.nytimes.com/2017/12/19/technology/bitcoin-winkle...
It might be a negative for society now (I assume you are referring to the shady nature of using it as an alt currency), but it's precisely the tech you need to provide an alternative against Facebook or other walled gardens many people love to hate on here.
It solves multiple problems at the same time. Content creators can get paid by design, tech is open an transparent and scalable. It's unlike anything we've seen before.
Exactly the same as it looks today. Because nothing has changed in the last 15 years either (Bitcoin was released in 2006).
> it's precisely the tech you need to provide an alternative against Facebook or other walled gardens many people love to hate on here.
How does cryptocurrency help with any of that?
> tech is open an transparent and scalable.
Citation needed.
> How does cryptocurrency help with any of that?
How can a globally spanning Turing complete computer help? I don't know, but we will see attempts.
> Citation needed.
Haha, I always forget we are at academic level of discussions :)
But for fun's sake, go to https://coinmarketcap.com/ click a random currency and click source code / read the whitepaper.
Smart contracts deployed to the networks are also open to be inspected, here, take a look: https://etherscan.io/address/0x00c83aecc790e8a4453e5dd3b0b4b...
Yes. They seem to be a solution looking for a problem. What problems can you imagine smart contracts solving?
> How can a globally spanning Turing complete computer help? I don't know, but we will see attempts.
So the answer is "nobody has thought of a single way this helps, after 10 years of thinking about it".
> But for fun's sake, go to https://coinmarketcap.com/ click a random currency and click source code / read the whitepaper.
OK The first one I clicked was Qtum: https://coinmarketcap.com/currencies/qtum/ . The whitepaper link goes to a 404.
The second one I clicked was VeChain. https://coinmarketcap.com/currencies/vechain/ . It has no link to source code or a whitepaper.
The third one I clicked was Dash, which thankfully had a whitepaper. Let's check it out: https://github.com/dashpay/dash/wiki/Whitepaper
> Currently the Dash network has ~4,800 active masternodes [8]. By requiring 1,000DASH collateral to become an active masternode, we create a system in which no one can control the entire network of masternodes. For example, if someone wanted to control 50% of the masternode network, they would have to buy 4,800,000 DASH from the open market. This would raise the price substantially and it would become impossible to acquire the needed DASH.
Oh my god
> Bad actors could also run masternodes, but not provide any of the quality service that is required of the rest of the network. To reduce the possibility of people using the system to their advantage nodes must ping the rest of the network to ensure they remain active.
Oh my goddddd
Nobody making this has any clue about distributed systems, do they
What problems smart contact solve?
With my brief experience, they compute the state of a transaction in which everybody agrees. Why is that cool? You don't need an authority to tell who is right.
It wasnt. It was released 9 January 2009
My prediction is that some useful inventions will be adopted by regular people ok with regular old reputation based trust. And then some actual useful things will happen.
I was reading a report from my country's central bank experiment with e-money. A PoC token thing with a one time use rule enforced by a trusted network of intermediaries. They expressed some discomfort with this being a scalability issue and also not allowing offline transactions in case of infrastructure issues.
Ironically I found myself thinking that this could be solved by a digital equivalent of cheques.
BTC is over 10 years now, and the most powerful monetary authority in the world is now afraid of it. How is this slipping by people's minds?
The btc maniacs are winning.
But I'm not American and have no problem with a nanny state doing the right for society (crypto libertarians really, really hate society I have noticed).
I've got news for you:
BTC: 2% of the anonymous ownership accounts that can be tracked on the cryptocurrency's blockchain control 95%[0]
ETH: Just 376 People Found to Own a Third of All Ether Cryptocurrency[1]
[0] - https://www.bloomberg.com/news/articles/2020-11-18/bitcoin-w...
[1] - https://www.bloomberg.com/news/articles/2019-05-15/just-376-...
If you don't think crypto, an anonymous unregulated security, is being manipulated by a small amount of people then I have a bridge to sell you.
Not sure how that all can be trustlessly secured with blockchain technology
Additionally, finance is what controls and directs the economy. It is the business of money itself, in both the public and private sector.
Banks play a central role to any economy. Digital currencies can be centralized and controlled in the same way as any state owned enterpeise.
[0] - https://statistics.rice.edu/news/student-founded-blockchain-...
You may also want to see these for more info:
https://www.forbes.com/sites/darrynpollock/2020/02/27/blockc...
https://www.businesswire.com/news/home/20201203005110/en/Tra...
Presumably the shipment has a series of checkpoints, which add some amount of traceability. There's also the potential for insurance for blockchain contracts.
I only recently learned about oracles, but I suspect we're only getting started on unlocking the potential of blockchain.
If there are oracles making the progress at each checkpoint along the way available from the blockchain, and insurance contracts for potential disruptions at each stage, your contract can ensure payment on delivery, and the supplier can be insured against any disruptions.
edit: I think this is a valid thing to tackle potentially as a company, but right now it seems impossible.
Which brings me to the other point: currencies are governed at both ends; at issuance and at use. If you use a crypto that’s not approved, the government can simply arrest you for using one of its competitors. The treasury could likely do this without even needing to issue new laws, just new guidance. Governance is the reason for the existence of the US Treasury and Federal Reserve. It’s a core feature of any currency and the government isn’t going to abandon that lever of hard power. They’re only going to do a cryptocurrency that gives them more power, not less.
All of the stakeholders you list have a vested interest in not being disintermediated. They’re also deeply embedded in policy creation. I can’t help but notice the way crypto evangelists speak of crypto is the way leftists speak of Marx: in very vague terms outlining a utopian vision of a new economic paradigm that is frustrated by the sticky realities of the momentum of money and power. The reality of Marxism is different from the utopia, as would be the realities of central bank crypto (hint: it’s gonna be authoritarian af).
"Instead of relying on forecasts and estimates, the data collected by DCEP payments will provide China’s central bank with a treasure chest of information that can be used to monitor economic trends, predict consumer behaviours and resolve issues before they would normally reveal themselves."
Do you know more about the DCEP? who is setting the rate? How do they support offline transactions? Do they have contracts?
Most white collar crime is obvious and where the bodies are buried is largely known.
There’s simply no political will to do anything about it.
Crypto becoming mainstream isn’t going to change indifferent minds.
Physical reality is a thing. Burying our heads in ephemeral concepts is distraction, not change.
Winner-take-all elections lead to weak control over who represents your interests. It's like being party to a lawsuit where one attorney represents all parties.
And you can't fire your attorney for four years.
In the single attorney situation, SELECTING the attorney would be the major struggle. And then that attorney has all the power. The parties would then have to lobby the attorney to win the case.
And that's why our elections have become such a struggle and why lobbyists can buy votes.
And that's why Wall street firms can call up their friends and get a multi-billion dollar bailout.
You still have that stuff with crypto, just crypto exchanges not stock exchanges.
>What do I need a bank for?
Banks do two main things - taking savings and lend that out as mortgages. Crypto has been no good at part two.
Basically most financial services would still exist if in modified form.
I find this argument a little weird, because I think we can all agree that bubbles and fad tech isn't really great for society as a whole. If you believe cryptocurrencies aren't a fad and actually provide useful benefits to real people (which does not include "we built a company that does crypto stuff and made a bunch of money"), then ok, fair opinion, but I don't share that view. To me it just looks like a big house of cards built on something that is fundamentally not that useful or valuable, but is propped up mainly by speculation. Building a company on top of it that is sold for $400M is great for the founders and investors in that company, but doesn't mean that crypto itself is useful for society.
I apply this to other things, too... there are ton of lucrative, successful businesses built on top of and around internet advertising, but I think that entire ecosystem is a huge net negative for society.