"My theory would be perfect if only I could convince humans to stop acting like humans," is the original sin of bad economics.
I would submit that it is approximately impossible to have a cryptocurrency that is simultaneously popularly successful, and has even a significant minority of its users owning their own wallets. Because only a fraction of a percent of the general public has both the skill and the inclination to do something like that.
fixed that
>I was fighting human nature and losing.
>Everyone swears they will eat right and exercise, but most don’t. Everyone agrees they need to spend less to be financially secure later, but most won’t. Our users were telling us they would use ContractBeast to achieve those long-term benefits, but most weren’t.
>When I looked at the contracts the users were creating, I found most of them were ones in which a particular feature provided a clear and immediate benefit. Usually involving contract review and approval.
>Human nature sucks.
He did it the opposit. He blamed his product for going against human nature.This is misquoting him.
In other words, the is–ought problem as viewed by David Hume.
Computers themselves were impossibly unfriendly for so long. What if someone created a UX friendly cryptocurrency. Like any computer, deep down it could be insanely complex, but is it a requirement that the UX reflect that complexity?
The thing is user friendly UX usually creates user friendliness by removing the user's ability to control the product. For example, macOS vs BSD. The GUI makes it much more user friendly, but at the cost of limiting the user a bit more. Then again, perhaps there are exceptions.
Well not really. the parent I replied to specifically qualified it as users holding their own wallets. I agree that is a critical component. Exchanges are a bit of a farce from the perspective of "not your wallet, not your coins".
Like you say, exchanges that abstract this too much, for their benefit not yours, are probably distorting the original intent of a cryptocurrency. macOS doesn't have to hide all the knobs; they could have an advanced interface, which they do for some things. Why can't there be a wallet hardware/software that does the same? Is there something inherent that prevents this, making it "impossible"? Or is there just no business model around it, that can overcome the gravity of the kind of exchanges we have today.
For example, are wallet addresses inherently unmanageable?
How is anyone sane supposed to run their own servers in this case?
Shipping an endorsed EF implementation would undermine that requirement.
So instead, they publish and regularly update a spec, the major clients are all open source, to some extent the EF has sponsored the development of multiple clients, there is continuous interop testing between all the major clients going on, and the client teams meet at weekly EF meetings.
Ideally they would like to see client diversity in the execution layer as well (Geth et al), and consider single-client (Geth) dominance to be a weak part of the system.
"2.0 validator" is not a node, it's more like a client that talks to the PoS chain nodes (Beacon).
The Ethereum Foundation can do things like roll back a broken DAO. A 3rd party offering a potentially broken validator cannot force a fork to fix things.
It's also super weird the foundation is not building the validation code into Geth and making it a baseline part of a reference node as PoW certainly is.
Think of the foundation as someone like the World Wide Web Consortium. They research and lead the protocol(s) standardisation, but it's not up to them to do the implementation, besides perhaps providing a reference implementation.
Why is financial engineering inherently universally without qualification bad? I have a mortgage, an index fund, and an ATM card. I :heart: financial engineering.
Yeah because it takes up engineering time and produces no tangible good but to widen inequality.
I agree all of these or at least mortgages and index funds probably increase inequality especially given uneven access. As far as tangible goods — home ownership, retirement savings, and less time spent waiting at the bank.
Mortgages were invented way earlier. ATMs are an earlier invention. If you use todays categories they would have been invented by automation engineers.
While index funds are a financial product they were invented before financial engineering became a thing. Financial engineers are not needed to run index funds. They are employed to out perform them.
"Financial engineering plays a key role in the customer-driven derivatives business — delivering bespoke OTC-contracts and "exotics", and implementing various structured products — which encompasses quantitative modelling, quantitative programming and risk managing financial products in compliance with the regulations and Basel capital/liquidity requirements."
And i am not alone with my distain.
"The financial innovation often associated with financial engineers was mocked by former chairman of the Federal Reserve Paul Volcker in 2009 when he said it was a code word for risky securities, that brought no benefits to society. For most people, he said, the advent of the ATM was more crucial than any asset-backed bond."
As for definition of financial engineering, i takes those from http://www.wirtschaftslexikon24.com/d/financial-engineering-...
The term financial engineering is also used insofar as it is about the use of innovative financing and risk hedging instruments. In this sense, financial securities are first broken down into their basic elements, e.g. interest, repayment, currency, maturity, security, additional rights (»stripping«) in order to be able to evaluate them (individually) better. Based on this, new, optimal financial titles are created during »Replicating«, in which the modules are optimally combined according to the respective financing case.
The concept of financial engineering can be seen in summary as the design, development and implementation of innovative financial instruments and processes as well as the realization of creative, tailor-made solutions for investors and buyers
Still hard for people not deep in it — me — to see clearly that crypto doesn’t contain the seeds of a better index fund or a cheaper mortgage.
If crypto made it meaningfully easier to borrow capital to invest in utility assets, then I'd :heart: it too. (Mortgages)
If crypto made it meaningfully easier to own equity capital in assets priced by utility, then I'd :heart: it too. (ETFS)
If crypto made it meaningfully easier to transact for utility goods/services with my capital, then I'd :heart: it too (ATMS)
Crypto dos none of these things.
What it does do, is it allows me to arb trade against misinformed retail liquidity providers who foolishly put their capital into DEX's.
I do not feel as confident as you seem that the group of things called “crypto” will not be useful for financial services.
To give you a crypto example of this, Aave is financial engineering, because it allows users to make a bet that they can execute high-volume short-duration trades that yield more than Aave lending fees.
In terms of what is financial services, my definition is: Any action taken that allows capital holders to better deploy their capital into the real (read: goods and services) economy. Again, no prefect source, but [3] [4] [5]
Again the key nuance here is financial services primarily focus on supporting the real economy, while financial engineering is primarily focused on risk/reward
And to be frank, I would absolutely love it if cryptocurrencies supported the real economy in literally any way shape or form. I would get "BTC4Life" tattooed on my forehead, I would dedicate my life to working for the innovators in the space, but unless you've got some secret, I don't think you can give me an example of literally anything cryptocurrency does to support the real economy that a centralized solution couldn't also do.
[0] https://en.wikipedia.org/wiki/Financial_engineering
[1] https://www.investopedia.com/terms/f/financialengineering.as....
[2] https://www.iaqf.org/what-is-financial-engineering
[3] https://www.imf.org/external/pubs/ft/fandd/2011/03/basics.ht...
[4] https://www.cisa.gov/financial-services-sector
[5] https://www.law.cornell.edu/definitions/uscode.php?width=840...
The nuance makes sense on its face. Although I don’t trust my own judgement of what impacts the real economy and what is just shuffling of decomposed elements of risk and reward.
Not only you can make this up but it's literally happened hundreds of times in the history of cryptocurrency. So much that there is even a catchphrase for it: "Not your keys, not your Bitcoin". MtGox being the most infamous example.
> As usual crypto in practice is the opposite of decentralized because people. Will. Not. Run. Their. Servers.
1) Only a small percentage of the total Bitcoin supply is held on Binance.
2) Self-custody doesn't require running your own server.
Why is this the top comment? I don't know (but I have my suspicions).
I was there for it. I mined my first coins in late 2011.
Few people want to run their local node (server), few people want to point their wallet at their own node, and fewer people want to run code they've compiled themselves. If you aren't running your own node you are relying on someone else's.
As a mass adoption decentralized trust-less technology for transacting, bitcoin has failed.
That people are still getting burned by trusting major exchanges is hard to believe, and why you really can't make this up. It's stranger than fiction.
>(but I have my suspicions).
Yes, it is me. Jamie Dimon. Warren Buffett and George Soros are here next to me too. Bill Gates is on the way, and he's bringing chips and guac. We're all out to get those pesky crypto entrepreneurs.
While it's not perfectly decentralized, e.g. some users do delegate their trust to centralized services for convenience or security, it is still more decentralized than fiat where (digital) self-custody is simply not possible. Decentralization and trust are a spectrum, not a binary. Even compiling the software yourself wouldn't get you 100% there [0].
I also feel that it's a bit early to call Bitcoin a failure but I do agree that it has a long way to go for mass atoption. Bitcoin is not disrupting the taxi or the hotel industry. It is disrupting the most entrenched and powerful "status quo" there is on Earth. We're talking about global banking, global finance, powerful governments, etc. Most people have no conception of what money really is or even that it could be different.
> That people are still getting burned by trusting major exchanges is hard to believe, and why you really can't make this up. It's stranger than fiction.
Surely you knew that Binance existed prior to this tweet?
> Yes, it is me. Jamie Dimon. Warren Buffett and George Soros are here next to me too. Bill Gates is on the way, and he's bringing chips and guac. We're all out to get those pesky crypto entrepreneurs.
My suspicion was simply that many HNers tend to reflexively upvote any comment that paints crypto in a bad light.
[0] https://www.cs.cmu.edu/~rdriley/487/papers/Thompson_1984_Ref...
I definitely do. If a part of bitcoin's chain of usage requires enough trust to ask the government to intervene to protect me, why not just trust the government?
>My suspicion was simply that many HNers tend to reflexively upvote any comment that paints crypto in a bad light.
I think that many people agree with me, and that it's not some reflex, fud, or deception.
I am not sure I understand the question, Bitcoin does not require trust or intervention from the government.
Your original comment is objectively incorrect in two different ways. It's not even remotely a surprising event[0] and most importantly, self-custody does not require running a server. Therefore I maintain my suspicion but enjoy your upvotes.
[0] "You can't make this up": used to express great surprise. https://dictionary.cambridge.org/dictionary/english/you-coul...
I disagree and have made my case elsewhere. Anymore and I think we'd be going in circles.
>You can't make this up": used to express great surprise.
I think I used it correctly, but agree to disagree on this as well.
Sorry for confusing your suspicions with something more conspiratorial.
Quite the opposite. It's getting disrupted by rich, powerful people, who are rocking it as hard as they can to disabuse common people of the notion that they have any alternative.
It’s because many people clicked the up arrow. There’s no Vast Conspiracy.
Edit: swapping BTC needs a centralized bridge as child commenter notes
Localbitcoins, localmonero... Two of many.
Not true, BTC does have smart contracts. They called it op-code and most people don't use it anymore, but me and my friends built a poker game and we play every Thursday.
The original wallet download also had a poker game, but they decided to take it out after a while to ensure btc wasn't labeled as "Gambling"
Leave it on an exchange and have access to customer support, etc in the event you get locked out of your account or whatever.
-OR-
Be the next news story of the person who messed up the transfer, forget their seed, etc. The entire blockchain ecosystem is still so incredibly difficult to use with bad UI/UX on top of it that this is the more likely outcome for the vast majority of people.
Richard & Gilfoyle At Landfill Site Talking ICO Crypto currency Idea To Russ:
"THUMB DRIVE, that's a thumb"
Usually you need to convert your gold to a legal tender currency in order to be able to spend it. You normally lose money on the conversion at a retail volume, though.
The biggest adoption came when people saw that money (fiat) could be made off of "investing". Bitcoin is a clown show. Blockchain, while probably useful, just doesn't seem to have any truly great applications yet.
Also, how are wallets the same thing as servers? That analogy seems a bit stretched.
It's a stretch but I think we can agree of the underlying statement: People. Aren't. Nerds.
The learning curve to understand the technology of wallets is comparable to that of understanding the technology of running servers.
PS: After writing this out loud I'm tending towards more people understanding how servers work than how wallets work.
Hehe, so using custodian wallets is like using Gmail to host your private gpg keys.
It's the same with email - it's actually relatively easy to run an email server even with all the issues; but the spam and deliverability issues are enough that basically nobody except the "true nerds" bother. I suspect most people on HN could run their own email server on a $5 node, but don't bother.
Nobody wants to download the blockchain on a desktop, start up a node, write their keys in a note pad, and configure their phone’s wallet app to point to their new locally hosted node.
God help you if you didn’t even compile your node and wallet app yourself.
Anything less than that involves trust
At least with Fiat if someone running my local Chase Bank branch siphons money out of my account, I can trust that a guy with a shiny badge will walk over with a baton to beat them up.
I never heard anyone advertising that rate before.
And that's only the first Google result that hasn't been unpublished in the meanwhile...
Source: https://www.coindesk.com/markets/2022/03/25/anchor-protocol-...
Nope, you just don't own any crypto assets if they are not stored on your own means. That's not hard to understand.
The point that Moxie was making at the time was that, pragmatically, most users would end up not doing this. Just as most people share their thoughts on Facebook or Twitter and not on their own blogs, and if they do have their own blogs they don't run their own server, and if they do it's a virtual machine on Amazon's hardware.
So something can be theoretically capable of enabling enormous decentralisation but actually not have that effect at all.
Centralization vs Decentralization is a similar concept to closed source vs open source. Just because the code is open source doesn't mean that people are going to download the source code and compile it themselves. The option to fork the codebase is also there. Neither of those options are possible for a closed source project. And to your point, the fact that a project is open source might not "actually have any effect at all". Doesn't mean the concept is inherently bad.
This almost makes sense, except that you have to take into the relative value of that amount, in particular relative to one's total net worth. If I want to protect $100, and that is all the money I have, I'll worry about security a lot. If I have $1,000,000, protecting $100 is not a priority.
The general assumption is that people put all of their money in one place, which is not true for anyone I know -- poor, middle class, or rich. Everyone has cash, bank accounts, various physical valuables, stock, etc.
We have guard rails in banking for a reason.
This seems demonstrably better than halving over 6 months...
Looking at you not-stable coin.
Maybe some people store cash or gold in a secret place but that is the exception.
His talk[0]/article[1] typically gets a lot of flack on HN whenever it is posted but it was really eye-opening to me.
[0] https://www.youtube.com/watch?v=Nj3YFprqAr8 [1] https://signal.org/blog/the-ecosystem-is-moving/
So the exchanges and the stable coins are used as a proxy which then means that they are disconnected from the actual currency. This means that there is an amplifier (leverage) on the way up, leading to spectacular bull runs.
Also...
Crypto trading on exchanges never uses the network. You send your crypto to an exchange on-chain, and all trading happening on the exchange then is off-chain: just adjustment of a few positions in the exchange's databank (as it should be: quick and efficient, within a centralised trusted institution).
People hate manual IT and system administration. They will sacrifice money, freedom, privacy, control, even ownership of their own works to avoid having to futz around with that stuff. They hate it that much.
(There are a small number of people this doesn't apply to. These are called enthusiasts. There are also car enthusiasts who like to change their own oil or even rebuild their own engines. We are talking about 99% of the market here though. Enthusiasts are a small niche.)
It's easy to understand why if you count time as money. Lets say you value your time at $60/hour, which is probably on the low side for people here but lets be conservative. Now lets say you have to spend three hours a month messing with your servers. That means it's costing you $180/month or $2,160/year. That doesn't count the additional cognitive load of having to worry about it or the inconvenience of something going down and needing attention at an inopportune time.
If those issues were addressed, you would see more people running their own servers. Unfortunately the "ease of use is for stupid people" meme goes way back in tech culture:
http://catb.org/jargon/html/P/point-and-drool-interface.html
^^^ This is why FOSS has never crossed the chasm. It's a cultural problem.
Another contributing factor is the love that some developers have for complexity. They see complexity as a sign of intelligence. It's not. Simple systems are far more difficult and require much more intelligence than complex systems.
Binance is a centralized exchange. There are both centralized and decentralized exchanges.
> people. Will. Not. Run. Their. Servers. Moxie nailed it
People don't need to run their own servers. They just need to use a light client which is even light even for mobile and browser extensions https://eth.wiki/concepts/light-client-protocol Light clients existed before Moxie's post
The only problem is adoption of secure practices by popular publishers, like Metamask.
Side note: Opensea isn't decentralized either, its a centralized NFT exchange.
Futhermore, people who use Binance might also use a number of other options.
We've seen this many times, and it's a shame because letting another party manage your wallet or run a node for you defeats what I find attractive about bitcoin - the ability to be a peer in a decentralized peer-to-peer system.
If Binance went under in that time, people would have simply been screwed and lost their coins Mt.Gox-style.
Bitcoin only achieves it's decentralized promise if everyone hosts their own node and connects their wallet to it, and I'm personally not seeing that.
Why don't people run their own nodes and connect their wallets to their nodes exclusively? Because it's a pain, and nobody wants to host their own servers. They'll pick gmail over a mail server 99% of the time, and that is bad for the promise of bitcoin.
I would wager most/all cryptocurrencies have similar problems.
Moxie's web3 blog touched on this, and he nailed it.
Having your own keys and using a wallet application that connects to someone else's node is better than keeping your coins on an exchange, but you're still relying on someone else's node to not screw you.
Compare the meager 16k nodes people trust with the 100 million who claim to own bitcoin.
https://www.wsj.com/articles/bitcoins-one-percent-controls-l...
(no paywall: https://archive.ph/73vR1#selection-4213.0-4213.97)
I have no data on this but if history is any indication, I'd wager 90% of user's wallets point to the same 100 nodes.
All of crypto looks like PayPal with extra steps.
If I'm incorrect someone please educate me on this.
Taxing in kind is way better, it's inflation proof.
I really encourage you to think about what that means, and if you didn't know he said that, what it means about the places you get your news from. Why would it not be one of the biggest news stories of the year that one of the most powerful men in the world stated he was going to reduce the power of the worker?
I don't think you've actually thought this through at all and you don't understand even the basics of how it really works.
You also didn't address my specific question about fed policy when the Chairman himself said he was going to tip the balance of power away from workers. Do you believe the fed chairman doesn't understand economics?
What is Moxie? A regional beverage that is the origin of the word, now the official soft drink of the state of Maine: https://en.wikipedia.org/wiki/Moxie
Privacy and anonymity are not the same thing. Signal foregoes the latter to provide the former to a much wider range of people; foregoing the latter enables substantially better usability for non-technical people.
This makes no sense. If you wanted to prove that you would need to have a signal equivalent that does not use phone numbers. Where is that?
Anyway here’s some alternatives:
Briar (no iOS client?)
Threema (not free as in free beer)
Wire
Matrix
XMPP
Telegram (can be used E2EE for 1:1 chats only and is off by default)
After learning this I just lost respect for him.
[0] https://amycastor.com/2021/04/07/signal-adopts-mobilecoin-a-...
I've been using Bitcoin since 2009, and RedPhone/TxtSecure (Now called Signal) since 2010, and I still have zero clue how I'm even supposed to obtain MobileCoin. It's really a toy project at this point with no real adoption.
Being able to send money via a secure chat network is a super important utility that is currently under-served in a big way, but MobileCoin itself is basically a whitepaper and a bunch of toy code that has a novel re-implementation (in rust) of Monero as a stableishcoin, which, last I checked makes it completely incompatible with the rest of the blockchain ecosystem.
They are making zero effort to shill, or push MobileCoin in any way, and neither Moxie nor anyone on the team stands to profit greatly from massive MobileCoin adoption.
The CEO of MobileCoin already admitted to using MobileCoin to fund Signal [0] and Moxie being the original CTO and paid advisor of the coin as mentioned in the article; also meaning he was a paid shill and part of the scam.
They already made the effort to create, shill, and then dump the tokens as soon as it was listed on the exchanges. The fact that Signal already accepted the tokens in the first place tells us that they were most certainly involved from the beginning and were part of the pump-and-dump scheme of the token.
Since MobileCoin was pre-allocated with them owning over 50% of the supply with that being the only supported token on Signal tells you that both Signal, Moxie and MobileCoin are all complicit in the scam.
Cryptocurrencies can be held in offline wallets i.e non-custodial hardware or software wallets, like Metamask, Trust Wallet, Ledger Nano, Tezos etc.
But no, let's rush into the comments section and scream our heads off and create panic that it is 'exchanges === all crypto is scam'.
When it is really a case of what happens when you store your crypto on an exchange rather than a non-custodial wallet.
They can, but if you'd like to convert that into fiat (I know a dirty word) you will most likely need an exchange.
Its like a list of all the small shop money exchanges that exists. But it doesn't mean its decentralized. It also means you always need a trusted third party for the exchange.
Wasn't crypto about going rid of those trusted third parties?
For most cases, yes. Binance, Gemini and some others provide a version of their token that can run in multiple chains. It's supposed to be 1:1 backed by BTC, but you have to trust them fully.
It's a little bit better for WBTC [0]. WBTC is a consortium of 30+ crypto projects who keep the BTC under their control through a multi-sig wallet, and that can be audited on-chain. In this case, the majority of the signers would have to conspire in order to steal the funds or do anything malicious.
renBTC is even more decentralized. It is part of the ren "network" [1], which provides inter-blockchain applications. I haven't looked yet how it works exactly, but my understanding is custody of BTC happens though a proper dapp. Last year I wanted to get rid of all my BTC, and I did it though ren. It was BTC -> renBTC -> DAI.
[0]: https://wbtc.network
In this case, what would happen would likely be pay extremely high gas fees or wait very long for the transaction to be picked up, isn't it?
I think what gets people making these comments is there really is no crypto free lunch yet that includes stable UX and fees.
What is its job? How often do you think goods and services are paid for with Monero? How often do you think the coin is used purely as a speculative asset?
It's certainly used far less often for small-scale, personal transactions. Businesses mostly don't support it yet. I'm hoping that will change. The only company I do business with that supports Monero is Mullvad, and that was only a recent addition. The media is certainly doing a good job of pinning the "Monero = bad guy naughty money" connotation to it. That connotation means it's doing its job though. If organized crime thinks it's secure and private enough, then it's definitely good enough for me.
I honestly can't answer the speculative asset usage part with any empirical evidence, but it seems to be used speculatively no where near as much as Bitcoin and Ethereum. I don't see crypto hype-guys chanting "MO-NER-O!" at all really in comparison to the other two.
Although those goods are predominantly illegal drugs.
When a cryptocurrency is mainly used for speculation rather than payment, it's a scam.
I don't crypto, but, isn't monero the coin whose primary intended use case is enabling illegal transactions by rendering them untraceable even to the police?
Are ... we calling that a good actor? Or do I just misunderstand what they're for?
.
> Now that is hyperbole.
No, it's not. Hyperbole doesn't mean "thing I don't agree with" or "thing I believe is wrong."
The person speaking very clearly wasn't exaggerating and very clearly meant themselves to be taken literally.
As I see it, if any crypto wasn't a scam, crypto fans would have long since agreed to give that thing as an example. The fact that the entire "industry" can't come up with a single compelling example, a decade and a half and twenty billion dollars in, is about as clear and obvious a proof as is actually possible.
Maybe Stripe should stop their crypto endeavors because they have a crypto offering which means it's a scam.
They probably should, yes. It makes them look sketchy and less trustworthy by association.
If you are saying 'ALL crypto is a scam' this also includes all and any crypto offerings by any company. Stripe, Coinbase, FTX, Binance, Moneygram etc are included. Not to mention the 'DeFi' space as well.
Stripe went in to Bitcoin, exited Bitcoin, then invested into a shitcoin called 'Stellar' and went back into crypto again supporting crypto exchanges like FTX, NFTs and offering crypto payments with 'Polygon'.
That is hardly getting 'suckered in'. I would argue that they are 100% fully complicit in the crypto scam.
Since we agree that 'crypto is all a scam', it should mean that Stripe, Coinbase and all the other companies that have crypto operations should be called out for their participation in the scam and they should immediately shut down their operations since 'all crypto is a scam' right?
They have a crypto division that will be used for crypto payments and NFTs. They also invested into a crypto token called 'Stellar' back in 2014 and said nothing since on the matter.
Plus the CEO of Stripe advises Stellar. [0] Moneygram is also working on the scam as well with this Stellar token.
I don't know about you but it seems that both Stripe and Moneygram are complicit in the crypto scam the same way that the crypto exchanges are.
Also you said 'ALL' by the way so this means no exceptions.
Contradicts:
> All crypto is a scam.
As you are trying to legitimise both of them of having a 'use-case' for their crypto offerings, holdings, etc which regardless of their business models and what they do as companies, it is still all a scam.
If we agree that both Stripe and Moneygram are fully involved in the scam by having heavy involvement in crypto offerings, holdings, etc, Then yes. They are a scam as well as everything they are offering is as well. No exceptions.
I'm going to politely bow out of this debate, this isn't a productive use of time.
In case you forgotten, you said: 'All crypto is a scam.' [0]
That means everything including anyone who is using it, or has holdings or are insiders which includes Stripe, Moneygram, Square (now Block) and especially Signal who are still directly involved in the entire scam. All the ones I've listed either got no backlash or did have some but never removed their crypto products, which certainly still makes them fully involved in the entire crypto scam as they continue to offer it.
Trying to give exceptions to companies like Moneygram and Stripe, Square, etc is legitimising their crypto offerings as a 'use-case' which contradicts what you said with it all being a scam, since we both know what they are offering is nothing but still a scam which they are all involved in.
There is no mental leaps here, No exceptions or any use-cases with that statement. If another commenter got the point straightaway [1], it is not hard to recognise that.
Moxie nailed it