Credit card payments, bank deposits, stock holdings: nearly everywhere humans hold value currently is a trust-based system that leaves you at the whims of more powerful counterparties.
If the bank decides to zero out your account balance, they can. You can sue them, and should be able to get you money back if you take them to court, but they have the absolute ability to destroy your wealth.
Bitcoin gives technologically savvy people the opportunity to store value in a way which is not subject to any other party. If I lock 1BTC up in an encrypted wallet, nobody can deprive me of that 1BTC without my consent and participation. That is the killer app.
And that's where you went wrong.
Its not "nobody" instead its everybody who participates in this who collectively decide where the price goes.
It doesn't matter at all that nobody can take your BTC the only thing that matters is the value of it which can be taken away while you still have it.
The value is defined by supply and demand and thus collectively moved by thousands of people by their actions. If enough people would sell the price would go so low that miners go out of business and the hash rate drops to the point where its no longer secure. At that point the value is essentially zero. You simply hope that there will never be enough people selling at the same time.
There is no guarantee that Tesla stock, or t-bills or the dollar will have value in 20 years. Money is a collective hallucination and can disappear as soon as people stop believing in it.
Bitcoins value can go to zero.
Stocks, bonds, cash: all monetary instruments' value can go to zero. Non-crypto assets can also be taken from you against your will.
Part of why Bitcoin is valuable is because it cannot be seized without consent of the owner (if owner is diligent about security).
Your criticism of Bitcoin broadly applies to all forms of "saving money" or preserving value. Value can go away from any vehicle you park your money. Your argument essentially boils down to "I believe Bitcoin in particular will crash more than other monetary instruments, so it doesn't have value" - which could be correct and you could short BTC if you feel confidently about that, but I wouldn't recommend it.
>Your criticism of Bitcoin...
No, it did not it pointed out the flaw in your claim. Your logic is nonsense. Thats not a critic on BTC at all.
>Your argument essentially boils down to "I believe Bitcoin in particular will crash more than other monetary instruments, so it doesn't have value"
Again no, that was not my argument nor what I said and not even implied. You make shit up on the go to deflect from what I actually said which has nothing to do with bitcoin but everything with your nonsense claim t which you already agreed on that is is wrong as you said ... >"....applies to all forms of "saving money" or preserving value."
It will allow vendors to collect more money for their service while at the same time allowing customers to pay less for the same service.
This is because a decentralized service does not need a thousand people and billions of dollars of VC funding to run (take Uber for instance).
Instead there will be the smart contract (which will require funding so there will be a very small fee per transaction), the governance body (which is going to be like the shareholder system of the stock market so token holders), and the vendors themselves.
Multiple layers of waste will be cut (middle management, needing an actual corporation to provide a service) and it's a more natural way of doing business. It's a pretty radical shift from the way we're doing things now and the wheels are in motion which is why so many people are excited.
So you are saying there are still middlemen who take a cut of the transactions?
I suggest you learn how the price of a product or service changes based on regulation, cost of employees, the amount of money a business owes in loans, basic stuff!
More overhead adds to the cost.
A smart contract infrastructure will not have zero overhead, but it will be close to it. Much less than a centralized service provider.
There is no "middlemen" but more just one "middleman" which is the smart contract which each will have a different protocol and how they handle fees.
Some will use it to pay for API calls, others will use it to do some automated token buy-backs. Depends on the contract. And the beauty is, the contracts are all publicly available so you can read it before requesting to the service.
Centralized processors have infra costs, perhaps they have found a good price point already
You could also be more respectful if you are on HN
(staking fees && smart contract fees) <<< (overhead of running a multi-billion dollar corporation)
You are incorrect to make that logical jump since anything crypto is still very early stage and has yet to produce viable, long term business models
Note that hiring devs in crypto is more expensive than other industries, due to its bad rap. There is no amount of money that could get me to work in crypto
I think these guys have become pretty delusional with the amount of power they experienced the past few decades.
The true crypto movement inside the developer circles of ethereum is trying to displace these assholes by flipping the value infrastructure to the actual service provider rather than the one who sits at the top of the centralized pyramid.
It will help poor people in the long-run when it allows more accessible services like driving and food delivery to pay more to them.
It may not work, but it's worth a shot and theoretically possible.
This current system of mega-billion dollar centralized tech businesses is actually very unnatural and strange in my opinion.
But I can deploy an app on AWS for fractions of a cent right now. What does Ethereum do?
More like billions of dollars and thousands of employees plus regulations.
It's not just about the deployment infrastructure, it's also about the actual vendor-client interaction and the cost of running the service, and where the incentives are.
Ethereum will allow you to deploy a smart contract that enables taxi drivers to provide that service to taxi customers. You do not have any employees and rather the taxi drivers will decide whether they wish to use your contract or not.
For making money: you can create a token which allows holders to have shareholder rights. You create a governance board to which the token shareholders vote on matters related to the business (expansion, token buy-back protocols, etc).
You're thinking with a centralized mindset. This decentralizes the service so it's driven by the community rather than a company. No one has employees.
So the service itself runs for pretty much free, and the consumer only pays overhead of staking and any programmatically added fees (which is going to be much, much less overhead than Uber carries).
Gas prices are transaction fees. Right now, both Bitcoin and Ethereum have high transaction fees - too high to use those currencies for small purchases. The high transaction fees are also delaying "Web 3.0" - new decentralized applications that use blockchains as databases. Once transaction fees go down (and Bitcoin's transaction fees have gone down a lot in the past couple of months), that will make cryptocurrencies practical for more purchases and applications.
Doesn't this mean that those who don't have the funds to be able to safely stake their coins see their balance depreciate as the incoming coins go to people who have the ability to stake their wealth, implying that the most efficient way to use the system is to concentrate wealth?
The goal of proof-of-work is to prevent supermajorities from taking over the chain's verification by turning verification into a lottery of labor. Proof of stake doesn't seem like it solves that problem.
Not necessarily. If the currency's market value keeps increasing, then even if you don't stake your coins, your balance will still appreciate.
> The goal of proof-of-work is to prevent supermajorities from taking over the chain's verification by turning verification into a lottery of labor. Proof of stake doesn't seem like it solves that problem.
From the Ethereum website:
"The threat of a 51% attack still exists in proof-of-stake, but it's even more risky for the attackers. To do so, you'd need to control 51% of the staked ETH. Not only is this a lot of money, but it would probably cause ETH's value to drop. There's very little incentive to destroy the value of a currency you have a majority stake in. There are stronger incentives to keep the network secure and healthy.
"Stake slashings, ejections, and other penalties, coordinated by the beacon chain, will exist to prevent other acts of bad behavior." [0]
[0] https://ethereum.org/en/developers/docs/consensus-mechanisms...
Go ahead and google "L2 ethereum" and "ethereum proof-of-staking migration". If you want to dive deep into the ecosystem it's all in plain sight for you to do so.
There is a lot going behind the scenes and I simply don't have time to regurgitate the information.
Layer 2 Rollups
> Layer 2 is a collective term for solutions designed to help scale your application by handling transactions off the Ethereum mainnet (layer 1), while taking advantage of the robust decentralized security model of mainnet. Transaction speed suffers when the network is busy which can make the user experience poor for certain types of dapps. And as the network gets busier, gas prices increase as transaction senders aim to outbid each other. This can make using Ethereum very expensive.
So it makes Ethereum cheaper. As someone who doesn't really get the hype, this doesn't help at all. Making Ethereum cheaper doesn't help me if I don't have a reason to use Ethereum.
After Googling "ethereum proof-of-staking migration" my take away is that moving to proof-of-stake will make it more robust and more energy efficient. Again, it doesn't tell me anything about why I should use Ethereum (or any other cryptocurrency) in the first place.
Everything I read about crypto talks about how it's currency that can be produced by anyone* and blockchain inherently makes it possible to know who did what and when. As a layperson, none of this is interesting or useful. The average person isn't going to start mining, the average person isn't going to speculate on a very volatile market, and the average person has no way to spend any crypto that they own. I'm not saying it's your job to fix the optics here but I've read a ton of comments in this thread and not a single person has pointed to something that made me think "I could use that" and I'm the kind of person who likes to browse Github looking for weird things to try out.
* Provided you have enough money to build a powerful PC and afford the electricity cost
Sushi, yearn, aave.
Right now with the current function invocation costs, ethereum ecosystem cannot support meaningful apps outside of trustless banks which is why L2 is extremely important. It's going to unclog a massive drain if done right.
The solution you have come to is a fair one (which is that truly developing a decentralized infrastructure that is reasonably priced to run apps on has too many challenges to succeed, at least the current solution that ethereum is providing).
I have hope that these problems can be surmounted by the ethereum development team. There are lots of challenges, and that is why everyone says we are at the beginning stages.
I think it's worth a shot, and if it succeeds I do believe we'd live in a better society.
Im particularly fond of Hyperledger Fabric, though it is quite antithetical to the crypto narrative.
I think with the amount of activity on AAVE and yearn, plus the growth these projects have received have killed that argument. Very 2017 argument that no longer makes any sense and is presented by luddites.
Most the bottlenecks right now to why you don't have day-to-day apps deployed on ecosystems like ethereum is because of the gas prices. You have hundreds of very intelligent developers working to decrease this to fractions of a cent.
There are legit architectural changes like proof-of-staking and L2-proposed changes that will for sure reduce the price of a function invocation in ethereum.
But you probably don't care about this, because you'd rather hang your nose high and pretend that you're much smarter than a whole ecosystem of extremely talented developers (including some award winners). Enjoy that feeling mate, it's not going to last long and it's all entirely ego-based.