For example: https://www.bbc.com/news/business-60912789
These articles all follow a common pattern.
1. The trigger – Inflation/distrust in government/bank withdrawal restrictions/paypal freezes your funds/country is at war/etc
2. The response – People gravitate towards a system that is resilient to whatever failure mode they experienced
Those who haven't personally experienced #1 (such as world superpowers, the wealthy/"elite") seem not to be able to grasp the benefits. Meanwhile in places that are smaller/less stable/not economically self-sufficient/on the fringe, people are increasingly turning to it as the best alternative.
Experienced hyperinflation, experienced civil war, experienced buying bread with 200,000 dinars one year and 2,000,000 next year etc. Experienced scary people with guns knocking at your door. My family and their ancestors all lost all their money and possessions numerous times over the last 100 years, including in the mid-90's.
And yet, I feel it's the people IN position of Western privilege, who have NOT experienced actual 'dystopian future', and what a hostile government actually CAN do, and what living under duress is ACTUALLY like, who think Crypto will somehow solve such problems based on their theoretical envisioning of only a specific part of dystopian future. I still believe Crypto, like anything else, survives at the mercy of your local government. It has a tremendous set of requirements, complexity, and telltale signs, to be helpful against hostile government which can and will knock at your door with a gun, or criminalize all crypto use/mining/exchange, etc.
The tech is the easy part. If you're conducting illicit transactions in some kind of attempt to dodge regulations - however your (potentially) corrupt regime defines "illicit" and whether the "regulations" are just - then obfuscation isn't going to help you for very long.
The ability to use the internet at all is a function of the willingness of the people in charge of a government to 1) allow usage of the Internet by anybody and 2) the willingness of the people in charge to allow you in particular to use the Internet.
"Those who haven't personally experienced #1 (such as world superpowers, the wealthy/"elite") seem not to be able to grasp the benefits. "
A lot of the arguments in this thread could apply to free speech as well. Pretty scary how many HNers feel that way.
The fact is there is no reason to believe holding crypto would retain value if the united states went through an country-ending economic crisis; it more likely that your crypto would also just become equally worthless and also crash in value. Treating the United States as a "future Argentina" makes no sense, especially when it's the US-based VC investors who are indirectly backing the value of Argentinian purchased bitcoin. If you end up in a situation where the USD worthless, then there is no wealthy counter party to prop up the value of your cryptocoin.
It makes no sense to look at third world countries with relatively tiny economies and believe that crypto will retain its value if the US went through a similar situation.
I mean, I'll happily concede that cryptocurrency was something that was actually stable in value, was widely accepted and understood in local markets in the global south so you could buy food, save for your kids education and bribe the border guard with it, then it would be even better than gold earrings, black market banknote swaps, hawala or trusting you would be able to access your offshore account in future. But it isn't, the fact that some people would dearly like it to be that way doesn't make it that way (especially not the "stable in value" part), and there isn't an obvious route for it to be that way.
In developed nations, populations who are unbanked/underbanked typically have much bigger fish to fry. In developing nations, they typically already have a solution to the banking problem... and also bigger fish to fry.
You'll notice that every article hyping up cryptocurrency as a solution for these things refers to "early adopters". The adopters are no longer early; they're now a perpetually fringe sub-population. (They're also presently experiencing inflation in crypto for the first time.)
Some data points to support this:
- most major algorithmic hedge funds, market makers, etc are significantly involved. Not the janky crypto native one, the lethal ones from NY.
- Microstrategy had to convince a whole slew of board members and legal to convert their treasury to btc (“wealthy/elite”). Saylor is on record as saying that all but 1 of them where already on the space and fine with it, or something to that effect.
- this is old days btc lore, but there is a famous known event of Wences Cesares and I want to say Reid Hoffman having a SV get together with a few other who’s-who and sending a couple mil in btc around their phones while sitting in a living room. This And related Got most of the early day big tech people who are in it now to invest. This was years ago. Peter Thiel is the most public of this group today.
- CIA had the btc core lead Dev visit to explain the tech in 2011 (Gavin Andresen/spelling).
- Go to a digital assets event in DC that gets actual DC people to attend, and you’ll have notable elected officials discussing its use as a covert tool
- US has paid foreign fighters in it
- Bank of International Settlements is allowing member banks to hold a % of btc in reserves
- Fidelity has mined btc since early 2010s and is notably involved today.
There are a lot of examples like this out there. It’s a large wealth transfer currently benefiting really top crust people/orgs and the tinfoil hat crowd. Everyone else is reading Paul Krugman opeds and calling it a day, or missing the key so-what of the tech that’s worth committing to.
https://www.coindesk.com/markets/2020/06/16/venezuela-is-a-t...
tldr; either the crypto itself is traded like real money, or a l2 or even centralized unconnected layer is - either way on/off ramps that currently exist (p2p and centralized) continue to exist and thrive.
> But a major part of Venezuela's crypto operations involves businesses swapping out of bolivars to beat inflation, said economist and finance expert Aaron Olmos.
> "Nobody is going to tell you 'every night when we do the books, we convert bolivars into bitcoin,' but yes, this is happening."
You pay fees for every single transaction: chain storage, gas, if you want to deposit or withdraw or exchange to another currency, etc; it's slow to go through and at peak times you get gassed out and it doesn't go through at all.
The value fluctuates wildly at all times of day, so your transaction might lose a significant percent of value before you've had a chance to even access it let alone trade it for a more stable currency or asset. Oh, and you have zero safety net for if something is entered wrong, a key is lost, if you end up not receiving the item you purchased, you're outta luck and there's no bank or credit card agency you can petition for a chargeback. Plus you lose ALL your money with no recourse if you can't keep track of a non human memorizable secret key, or if it gets in any way intercepted or stolen from your computer, or if you accept the wrong transaction...
For real, every time I try to answer my I do crypto, often people just don't understand. They just don't. They just don't understand why I don't trust entities.
If you don't understand this, then you don't understand crypto. Period. There is no other debate necessary. Period. Full stop. We go on our own way.
Full stop.
I understand that you are saying you were burned by a central authority. But the truth is that the only way to get everything to work is with a central authority. The article gives examples of crypto being fully reliant on central authorities, for instance.
Everything being done by crypto today could be done better by trusted companies putting together a semi-open peering arrangement that both doesn't waste pointless electricity and that doesn't allow just any potentially hostile actor join the group of authorized peers.
And for me it is at the moment the crypto side. I don't trust exchanges and I can't be bothered to do local transactions. So central government "approved" system is easier for my life.
In fact, given that ownership is fundamentally a mutually agreed upon social norm, and not any sort of real truth - Even if you trust the central authority of your locality less, they are likely a much better resource regardless.
I really think crypto advocates just don't actually understand how power works. Power is not the number in the ledger, it's the number of people who will step up to enforce it for you.
It turns out that number is very, very tiny for crypto. Much, much larger for your local currency - even if it's not as large as you'd like it to be, or "fair" as you think it should be.
Crypto companies with legal exposure? Yes can be censored.
Open source crypto protocols? As long as raspberry pi’s and digital comms exist, it’s akin to saying the govt can shut down Linux. This is the censorship resistance that matters. It’s not perfect (some ungodly amount of nodes are in AWS and the Trail of Bits report did a good write up as well).
The central authority here is open source software. The author spent a lot of words demonstrating they didn’t know this at all.
There's this fantasy that crypto can replace money, and that you would therefore never need to trade it for real dollars. That's not going to happen, for reasons outlined in the article and because no medium of exchange that's deflationary can ever be a currency.
If it goes up in value over time, it's an investment and people won't spend it.
Will the open source be free forever? Sure. Whatever. Can people run nodes that burn electricity? Yup. Does that matter? In no way that's relevant to the general public.
Worse, even the crypto networks themselves are subject to issues with their authority: Enough bad actors who join can steal the value of a large percentage of the network.
When we're looking at potential theft of billions of dollars, you better bet that someone will invest the hundreds of millions required to rewrite the chain and take control of a large number of coins.
Then what? Then everyone will need to get together and act like a central authority to either rewrite the chain back to its state before the attack, in which case you do need to rely on a central authority, or you need to admit that _allowing untrusted nodes into a financial network is a Bad Idea._
"Censorship resistance" is irrelevant too, by the way.
Bitcoin, an open source crypto protocol, launched without the existence of crypto companies.
Mt Gox, instead of helping btc, almost set it back years due to the hack.
Bitcoin grew adoption and scale on tor/DNMs and localbitcoins, both of which had organic, non-exchange economic activity which kept accounting in pure crypto vs returning to fiat/needing an exchange.
The attack you’re describing is a 51% attack, and it had yet to happen due to protocol design on the main chains. If it does, I suppose you’d be right.
But I generally think you don’t understand how the tech works and what proof of concepts exist to disprove your opinions, or at least strongly counter your opinions. and without addressing why they’re wrong you have a weak argument.
Your assertions are the ones that are extraordinary, so yours is the side that requires proof. You're effectively claiming that a distributed peer database with a somewhat secure history has some kind of intrinsic value. I'm calling that BS.
Where is the money? Where is the _value_?
The fact that a few people were trading Bitcoins doesn't mean it can ever go mainstream. Something that's a niche hobby isn't going to change the world. If you want to use Bitcoin as a hobby barter medium, then have fun, but that doesn't imply value outside of a tiny community.
Prove me wrong. A "proof of concept" is in the technology domain. For crypto to work outside of a community of crypto-libertarians, it needs to be usable by regular people. Libertarians are famous for not actually being able to design social systems that work in the real world; last time they tried they were chased away by bears. [1]
And as the article pointed out (did you read it?), most apps that support crypto rely on a centralized server since the chain can't be downloaded to mobile devices. How useful is a medium of exchange that requires you to bring a laptop with you everywhere?
[1] https://www.vox.com/policy-and-politics/21534416/free-state-...
Ah, or your assertions are akin in a technical sense to saying “the internet is a complex series of tubes, prove me otherwise!” Your criticism is based on a pretty clearly patchy technical understanding.
But I think you're absolutely bonkers if you think that any crypto today is actually a real solution to your lack of trust.
Here's my take:
You think that by using crypto, you're avoiding trust in governmental and financial institutions - and in some (incredibly limited - aka drug/gun) markets you are, but the exchange that you are making (intentionally or not) is not trivial, and not acceptable for most people most of the time.
What you are giving up is the power of the governmental institutions to enforce any sort of agreement or contract you make using crypto. Not their currency, not their problem. It's now your problem to resolve scams and fraud, and you have to do it using your limited powers.
And to be clear - you have really, REALLY fucking limited powers here. Unless you are so wealthy that those "entities" that you so dislike are mere nuisances dealt with by the law firm you have on retainer, or you can fund your own black-ops team, you're living in lala land if you think you can personally enforce the contracts you make. You can't. You don't have the oomph. Full Fucking Stop.
---
So I understand your lack of trust, but hate to break it to ya, bud - crypto is not solving your problem.
Simple example: You hire a contractor to remodel your bathroom, and you pay him in crypto (and we'll ignore for a moment just how laughably absurd the chances of this actually happening are...). You agree to pay 20K for the remodel, with 10K up front. He runs off with your 10k. Now fucking what?
Now all you need is connected oracle that can judge completion percentage of a bathroom and communicate with the blockchain! /s
You are out the labor and materials with no payment and no recourse. It's not beautiful for the contractor why would he agree to this with no arbiter between the two of you. And as soon as you introduce an arbiter you are back to someone else enforcing the agreement not the blockchain. The blockchain adds nothing here that a standard court of arbitration doesn't.
also, perhaps the cause of people not understanding you is not some kind of lack of mental faculties on their part, but your - what I would describe as - extremely obnoxious style of communication
I personally think Bitcoin is a terrible currency for non speculative trading due to scaling problems and it's volatility.
Your own way is a deadend. There is nothing there. A currency is about relationships and trust. You can't own those things, you can at best only enforce them against people's will if they don't maintain them voluntarily.
With Naira the currency being as stable as a pendulum gets on a windy day, many middle class fellows seek to store their money in some form of stable assets. Crypto seems to be the easiest to acquire for the common folks while the politicians prefer and have access to US Dollars.
So blockchain only makes sense when:
a) You have bad actors
b) You need decentralization
The use cases for that are, for the most part, "subvert government authority". There are some cool other things you can do, like web of trust stuff, but the vast majority of the market is in the "subvert government authority" in one way or another, or is an outright scam.
You use blockchain if you have one very specific type of bad actor, and know for sure that they won't try bad things
Might change your opinion of it.
I didn't make any judgment about doing so.
I thought their crypto payments were tracked (open ledger) and basically nixxed? I.e. this was the grand counter-example of crypto use case :-<
We can discuss our personal opinion on the Canadian protests of Winter of 2022, but I strongly believe that for average citizen, Crypto payments leave a HUGE exposure / attack surface. YES, there's going to be a Hacker News person who can figure out how to safely transfer crypto, and maybe even do something practical with it, in duress situations; but I feel that would end up complex enough to be achievable effectively with other crypto-less, equal-complexity methods. Meanwhile, average citizen's ability to safely and anonymously and SAFELY use crypto under duress is extremely limited.
https://www.vice.com/en/article/jgmnpd/the-freedom-convoy-bi...
There were technically superior and more anonymous ways to do that kind of particular transaction of course. But we may differ as to what "average person" is and what their technical competence will be in the near to medium future. I believe average person still has tremendous phishing and scam risk with a regular, regulated, fairly static, designed for ease of use, documented, go-to-branch-and-we'll-guide-you-through-it electronic banking. I am skeptical of our ability to create a safe path for the average person through the dynamic, unregulated, ever-changing, technically complex, myriad-clients-and-zillion-methods-and-gazillion-exchanges all chock-full of scammers world of crypto.
You also forget 5) Outright scams, like rugpulls or boiler room-style scams.
I don't think "censorship resistance" is the correct term. I think what you're really describing is "law enforcement resistance" (e.g. your activities are illegal).
And even in those cases, unless cryptocurrency is circulating as actual currency in the economy (which it isn't), most of the law-enforcement resistance is fatally compromised by the need for onramps and offramps.
Want a $5000 loan from crypto? Better have at least $20000 in crypto assets.
How anyone is expected to get credit funding from this strange system is unclear.
Also the no custodian part is especially strange considering that most people who have crypto keep it on some exchangebank
Yup. That's potentially useful for speculators to earn expected gains from one cryptocurrency whilst also trading with another one.
But it's utterly useless for the common cases to borrow money (i.e. you don't have enough of it to buy what you need to buy)
I do think the whole event has dredged up some interesting ideas and desires that were being ignored, but of lot of those "cool promise here" ideas could probably work without a blockchain.
Use a different company and hope another few million doesn't get locked up? That seems like the only alternative and I'm not sure many people would think that's a viable alternative.
I am sure countries will want to censor it, but I don't believe they will be able to, as such the only risk to bitcoins long term viability is the markets demand. There are numerous examples of illicit goods that governments have proven incapable of reducing the demand for, e.g. drugs. So I don't think bitcoin is going anywhere.
I think bitcoin will take a different censorable form and we'll start seeing companies on top of the blockchain that can do things like refund unauthorized transactions and things of that nature, but the base layer will remain uncensorable and thus bitcoin could become both convenient enough (although not better, in my opinion) for rich countries to use as currency while holding the characteristic of providing tremendous benefits to citizens in oppressed poor countries.
I will concede international transfers is not a very large use case, and definitely doesn't justify the market capitalization of the blockchain base currencies FWIW
For amounts under ~$500, cryptocurrency off-ramps are often less convenient and more expensive than an international cash-to-cash remittance with Western Union or Moneygram.
If you think they're more expensive to use than centralized providers, you're probably using ethereum or bitcoin. I can send USDC on Algorand in any quantity for less than a cent
I imagine folks receiving remittances in Manila, Mexico City, Nairobi, Delhi etc. would have difficulty using stablecoins (whether backed or algorithmic) to buy food and other necessities.
While there might be cases you consider moral or ethical even though they’re illegal I’m not sure I’d consider this a net positive or any reason to think crypto will enjoy mass adoption.
It's also hard for me to understand these "payment outside of X authority system" ideas when the value shifts so wildly and so unpredictably. No one wants to get paid, not even criminals, in a currency that might be worth 20% less tomorrow, depending on what's going on with Matt Damon's Super Bowl ad for the criminal currency or whatever.
>If what you're doing isn't likely to be censored by authorities then you're being incredibly wasteful by using blockchain
If the wasteful people doing non-crime activities on the blockchain weren't there it'd be incredibly easy for the authorities to crack down. In other words, if the only legitimate use cases of crypto is facilitating crime, it can only even achieve that goal as long as many people are using crypto for the other stuff you think is wasteful.
In Vietnam, the government does capital control by limiting what bank can do with my money (I can’t request them to send 20k to the US unless I have an approved list of reasons). However, it is not illegal for me to send the money abroad, providing I can do it legally myself. So bitcoin is useful to me
https://nosafebets.com/2020/06/05/legos-the-new-gold-standar...
This is in addition to the arbitrary Tether-eth printing that you ought to be well aware of.
In other words, it just so happens that the exact situations where crypto is useful, are the same situations where it is very hard for capitalists to earn a good return on their capital. Unstable places or illegal markets.
It's not that the existence of crypto doesn't make sense. It's that investing in it makes no sense, because it will only be successful in scenarios where "investing in things" at all is a lost cause.
I'm imagining you want to run a server in which you want to prove a given open-source version of the code is processing the inputs, and the outputs are available for anyone to observe, verify, & store.
I imagine there's some ways to do this already, though.
Proof of Stake just seems like a protocol that isn't too wasteful and inefficient and could make for a decent standard.
There is no need for crypto for money laundering when it can be done at scale at Deutsche Bank.
The anonymous use cases are a chicken/egg problem because you still need on/off ramps. but the other issues make global crypto currency a no go.
1). Silk Road or dark net markets in general. Can't be done with Visa or other existing solutions at any kind of scale
2). Funding of political dissidents. Wikileaks, canadian truckers, etc. These people got blocked by traditional payment providers but still received crypto. (there are still other obstacles for dissidents but at least this solves 1)
3). Money laundering. Find someone who sells bitcoin miners, buy them with dirty money and use them to mine bitcoin sent to fresh address not tied to your other activity.
4). Uniswap and maybe flash loans in defi seems like new things I haven't seen in tradfi or elsewhere. Maybe some cool promise here
I'm sure they're others. But I think the key common thread is that all of them require censorship resistance. If what you're doing isn't likely to be censored by authorities then you're being incredibly wasteful by using blockchain