If the current financial system stopped working and for some reason we needed to actually use Bitcoin to pay stuff, it would not be possible. Cryptocurrencies don't scale, because the way they work is extremely inefficient.
How is that different from what we do now?
Lightning (an L2 system on Bitcoin) is essentially a system of peer to peer exchange of signed BTC transactions, which supersede previous ones, but don't get committed to the main net. In that way, you can keep a running tab between counterparties with effectively no marginal cost until one of you decides to close the tab by committing it.
Of course, I just made a wild guess about how many net settlements between banks would happen; maybe banks don't settle up from check clearing daily, but in a world where transactions are difficult to reverse and nobody trusts anyone, you'd want to settle up regularly.
What exactly do you mean? This is exactly the one use case where cryptocurrencies do work, compared to all the other bullshit use cases cryptocurrency hypists have came up with. Doing non-centralized transactions is what it excels at.
Unclear if you're talking about Bitcoin specifically or cryptocurrencies in general, but there are cryptocurrencies that handle transactions quickly and at scale in a secure and decentralized manner. Algorand is one of those, but there are plenty of others out there that fits the requirements.
Also most market cap isn't in those "more efficient" and "more decentralized" coins.
Crypto people think it’s getting rid of visa, Western Union, and government censorship.
That's an oversight of the year.
Arguably it’s even more annoying than if we just had posts that only say “I hate crypto”. But the idea that there is no apparent reason is laughably wrong. People give a lot of reasons.
To give you an example of a HN reader with reasons to dislike most cryptocoin stuff:
- cryptocurrencies, particularly those mineable on CPUs and/or easily laundrable, provide a serious financial incentive for scriptkiddies and other hackers to go and hack systems to have them mine for coins, encrypt them in coin-extortion schemes, or steal the content of wallets they find. Basically, it's like the absence of STIR/SHAKEN on a phone network - it invites scammers to robocall people and pull scams on them.
- mining of cryptocurrencies, especially on Bitcoin and other ASIC based coins, consumes an awful lot of electricity, which has been incentive enough for multiple operators to reactivate fossil fuel plants that had already been shut.
- cryptocurrency mines of everything but proof-of-stake coins produce an awful lot of e-waste. Some of that can be repurposed (e.g. CPUs, RAM, GPUs, FPGAs) which has serious side effects on its own (such as enormous gluts in the used markets when miners drop their rigs), some of that is uneconomical to repurpose (HDDs/SSDs for proof-of-storage coins, the mining process eats through them at an insane pace) and some of that is impossible to reuse (ASICs).
- cryptocurrency mines can lock up large parts of the hardware supply because miners pay so much more than even the richest gamer can afford. One might argue that that's a natural function of a capitalist economy, but sorry when you can't get a new halfway-decent GPU for years because scalpers buy up all the stock then the market has fucking failed.
- cryptocurrencies invite undesirable people and events. There have been almost infinite amounts of these, documented on [1] - legitimate hacks, legitimate coding issues that sent coins to null addresses, rug-pulls disguised as hacks, shoddy accounting or general business practices by people who got in way over their head (MtGox) or had no idea WTF they were doing (FTX). Or NFTs which all went down the drain once the free money spigot and the novelty wore off (on top of the OG NFT Bored Ape copying and thus promoting outright Third Reich Nazi symbols and edgy far-right memes [2]).
- cryptocurrencies invite those who think it's a good idea to use them as a proxy to evade securities laws or KYC rules, luring in gullible morons in the process and leading to loss of money.
tl;dr: too much money lures in too many morons and everyone but the original "investors" loses.
* shitty people scamming other people: Yes, everyone knows. It happens with normal money as well. I regularly get "How to avoid scammers" emails from my bank too. As long as something has value someone will try to use it to scam someone else.
* mining: Yes we know, mining is bad. Nobody wants it, it's going away. Could it go away faster? Yes, but it will happen eventually. Ban mining for all I care, nobody really needs it.
The thing is, governments don't want people to get scammed, and so they act to prevent scam avenues. But unlike, say, the trad-bank system the percentage of "scam" vs "legit" operations in cryptocurrencies is drastically skewed to the "scam" side, made easier by the anonymity that cryptocurrencies provide by design.
Many early adopters are salty that nobody would listen to us and investigate the criminals we were pointing out all along.
> cryptocurrencies invite those who think it's a good idea to use them as a proxy to evade securities laws or KYC rules, luring in gullible morons in the process and leading to loss of money
Generally the criminal schemes that actually took everyone's money were so simple as to not even be securities scams. The complex non-deliverable defi contracts were something people were playing around with to make prediction markets and other useful things.
> when you can't get a new halfway-decent GPU for years because scalpers buy up all the stock then the market has fucking failed
Okay, seriously, what system would actually create more cards here, some command economy where gaming is allocated a higher value than other activities? How does the company know how many fabs to buy/lease to prepare?
> promoting outright Third Reich Nazi symbols and edgy far-right memes
I don't see a lot of value in some censorship system that makes that enforceable. Should books not have been invented until we developed a technology to make it impossible to say mean things?
I don't claim to have a solution that benefits everyone, but at least personally I prefer actual people having GPUs to have fun with them over some miners polluting the environment for a ponzi scheme with them that brings benefit to no one but a select very few.
> I don't see a lot of value in some censorship system that makes that enforceable. Should books not have been invented until we developed a technology to make it impossible to say mean things?
The Nazi crap was just the cherry on the cake. It just speaks volumes about just what kind of ideological toxicity was freely allowed to spread. Or, to use an older analogy, when a Nazi walks into a bar and isn't kicked out, well guess what you have? A Nazi bar.
I think Nvidia/etc missed some serious PR by not giving out tickets to buy cards via gaming and hardware sites, to be rewarded with more tickets if those cards ended up being used for gaming. However, I think it's unrealistic and unhelpful to call prices "scalping" when there are conflicting markets for a product.
> a Nazi walks into a bar and isn't kicked out
A bar is a private entity with a target clientele and limited availability. It makes sense that the patrons can be and should be curated.
> ideological toxicity was freely allowed to spread.
Now we're talking about NFTs, literally DeFi. How would you make NFTs that would allow for pro-Tibet messages, etc, and not also allow any other text/image that people want?
The correct filter is in which markets list it, and which customers buy it. It's like a disgusting book - it doesn't invalidate the very concept of libraries.
Relevant: https://en.wikipedia.org/wiki/Psychological_projection
Isn't it backwards? If I have a few (officially issued) colored pieces of paper in my pocket, I can give them away in exchange for other stuff, but if I have a cryptocoin in my pocket, there is no way I can exchange it for anything unless another party (or a majority) agrees to that exchange.
Ethereum is about 20 for the electricity usage of a few steel plants.
Cryptocurrencies have one use: to evade regulation. As soon as that use disappears so will cryptocurrencies.
Crime isnt a side-effect, it's the point.
Does this take the migration to proof of stake last year into account?
Some produce up to 3,000,000 tons, so the ethereum network would consume about 0.1% as much energy as one of those
edit: Bitcoin for comparison consumes somewhere around 100 Twh, so is comparable to 1000 steel mills (which might be more than the number of actual steel mills in operation globally?)
Sometimes, HN appears to have the collective memory of a goldfish.
On HackerNews over the years, we've seen hundreds, maybe even thousands of sob stories from people like "X payment provider has locked my account and is not giving me access to my funds"
In every case, it's pointed out that crypto might be a way for people to reduce risk of this kind of thing happening.
Yet there's some people who continue to insist with a straight face that crime is the only conceivable use of crypto.
But one could make the argument that this site is technically an example of "crime", at least legally speaking.
In blockchain, redress is impossible. That's part of why it's so lucrative for fraudsters.
The failure modes in monetary systems are human, not technological -- and blockchains fuck humans. They make the problem worse.
The sales pitch for blockchains is a lie. The problem is real, but this isnt the solution. This solves only the needs of criminals in the strongest sense: people out to get other people.
Regulation will pop these schemes and nothing will be left -- it took 10-30 years to regulate credit cards. Hopefully regulators will step in sooner here.
I notice that disgusting, wicked authoritarians that relish in their desire to achieve control over other human beings absolutely despise crypto.
If I knew absolutely nothing about crypto other than the fact that enemies of humanity hate it truly vehemently, what should my judgement of crypto be?
Or is the sucker for a sales pitch the person who parrots whatever the nice funny man on the TV tells him to think about any given issue?
If you want to be smart, don't judges technologies based on supposed virtues signalled; judge them by understanding how they work independent of how their salesmen say they work. Learn, know and understand.
Your entire world view is pretty dumb: who is signalling what I should be allied to?
That's a dumb question; and it signals that you're ripe for abuse. All you need to be sold an idea is to have it associated, by signals of virtue, with what you hate.
You're not alone. This type of gullibility is the mentality of most victims of crypto; and indeed, many scams.
80% of the crypto community is people who think they're smarter than the people scamming them -- that's the other 20%, and they're winning
Payment channels allow arbitrarily high transaction rates w/ bitcoin, I've seen demonstrations sustaining hundreds of transactions per second. A side effect of their scalability is that no one knows the actual transaction rate-- only the few transactions related to opening and closing channels are broadcast.
> Crime isnt a side-effect, it's the point.
That is false and defamatory. Please withdraw this point.
I will not withdraw this point. It isn't hyperbole.
Cryptocurrency technology has the economic and social incentive structures of ponzi and pyramid schemes; and primarily enables fraud. The purpose is avoiding the law.
The best that can be said, about the unwitting, is they aren't conscious of the incentive structures they participate in; and hence spread scams without realising it. This is indeed, how pyramid schemes work.
These libertarian ideological projects prove Hobbes point: absent governance, life in society is "nasty, brutish, and short".
The properties of these systems ruin people's lives for the sake of providing, at its "most noble", and ideological casino for people to cosplay a financial system. And that nobility is really just a pyramid scheme framing device for spreading the scam around.
The ideological window dressing is nothing more than "hey, maybe these vitmins will cure cancer. Dont you want to cure cancer?! Don't you think BigPharma is terrible?! Dont you think the healthcare system is broken?! Here, take 100 boxes of these vitamins -- everyone wants them!"
Your prior statement claimed that that "Crime [is] the point", have you weakened your position or are you just saying it another way?
How is "avoiding the law" the purpose of Bitcoin? Please connect your argument to supporting materials.
In general. Every time I heard a cryptocurrency claiming to be fast and decentralized, it either didn't live up to performance expectations or there were major caveats to decentralization. I can't comment on Algorand specifically as I gave up on following crypto.
Not because the way they work is inefficient, but because if the financial system collapsed that badly, we would not have an internet, or power, or food, most likely.
This is... not true [1]. We'd need to use something like the Lightning Network. The traditional financial system also has layers build on top of it, so it makes sense that you wouldn't only use the Bitcoin base layer.
[1] https://voltage.cloud/blog/bitcoin-education/how-many-transa...
Yeah, but who actually needs that "problem" solved? Money launderers? Drug dealers? Scam artists? Adolescent boys whacking off to Ayn Rand books in their mother's basement?
Plus while a bank may devalue its currency, the point of it is to keep it stable -- something we haven't seen from crypto in any meaningful sense. Even the so-called "stable coins" are anything but.
There's plenty of people out there who disagree with central bank's existence and policy. I don't know if I'd call a currency "stable" when it's lost 80% of it's own value since being introduced and can have new liquidity created with little due process. All currency is an illusion, it's just about which illusion makes you more comfortable.
It's all just money, and money isn't entirely rational to begin with.
Something that depreciates can still be stable. The US dollar loses value at a relatively predictable rate. We can see what an unstable currency looks like right now by looking at Argentina, where the peso has lost 47% of its value in a year.
BitCoin is more like the peso than the dollar, hence why its called unstable.
> All currency is an illusion, it's just about which illusion makes you more comfortable.
Currency isn't an illusion, it's a social construct, and its a deeply embedded social construct.
By that logic, Earth is tilting dangerously out of control and the moon is hurtling off into deep space.
This is exactly the issue that a lot of people have with them. Not to mention that the people in charge of adjusting the value of your life savings aren't even voted in...
Cryptocurrency aims to give you complete autonomy over your money. Something 99.99% of people don't currently have.
That sounds nice, but it doesn’t come for free. Price volatility, trust issues, etc. to name a few.
I think a key issue is that credit, money, wealth, currency, while related, are really different things but for many people all of it is “money”.
These are not specific to cryptocurrency. The trust issues are primarily a result of crypto scams and not innate to crypto. Just as scams involving dollars, euros etc., have nothing to do with the currency itself.
Where crypto shines on the trust aspect is that you don't have some guy in an ivory tower deciding to devalue your crypto by 5%/year. You can choose to buy into inflationary cryptos (doge coin for instance), or you can choose to buy into crypto's with fixed supply. No one can take your share of the supply away from you or change the rules on a whim. That's absolutely huge.
"Compound interest is the most powerful force in the universe" - Albert Einstein, supposedly. Central banks use that force against citizens and everyone just accepts it because it's been that way for so long.
> There’s a reason we have target rates
In an interview Powell admitted no one really knows why the target is 2%. Why is 2% better than 10%, why not 0%? We don't need to encourage consumption with artificial money devaluation, humans already discount the future because of the finiteness of our lives
So while in theory crypto offers that alternative that should be better than those shitty countries economic policies, in practice, this gave them something worse than their local bank.
Yes Yes, you can use a hardware wallet and would have avoided all of that, the reality is that a very high percentage of people were just using the tools offered to them and didn't think it was all a giant fraud.
Not only that, if you really want to look at exploitation of the poor look no further than our large banks in America.
In abstract terms, independant trade without ties to a dominant financial gorilla (once a time the pound sterling and perhaps one day the Yen (or other)).
That was a clean enough goal from the outset, my personal objections (expressed in cypher forums back in the day circa the bitcoin paper dropping) are wrapped in the failure to tie the OG bitcoin to some form of verified "energy used to mine" signature (a curly one) and the high energy cost of verifying OG bitcoin transactions.
With 20/20 hindsight it was likely a premature release, in fairness it was more of a proof of concept begining that lasted longer than expected and then took off.
What currency do you propose people, companies, and countries trade in? And why that currency?
A currency is abstraction for trade in wider circles where (the common case) trade between two parties isn't sufficient ( typically parties supply | demand a basket of various resources, various energies, various intermediate and finished goods ) and for trade to take place the guarantors must have faith in the agreed abstraction for transfer of credit; additional mechanism that verify transactions are an added bonus.
Both now and through history many currencies have been used and are being used.
I've given examples of US dollars, the Pound Sterling, in the context of this sub thread bitcoin is an obvious example of a currency that has been used to facilitate trade; less obvious but important examples of currency are the word of a trusted person of faith (as used historically along the original Silk Road and today throughout Hawala and similar mechnaisms).
What strikes me as odd about your question is the implicit assumption that I favour one singular currency over all others.
As I said the current system is better so I don’t see your point as some sort of counterpoint to my observation that crypto has utility, it’s just relatively low or tuned to less in demand needs.
Whether crypto can actually mitigate that is an open question. Arguably, a society that accepts strict financial controls would also prosecute crypto users.
I don't believe for a minute that today's Court would expand that reasoning to digital currencies, but it is a foot in the door.
Crypto solves (to a degree) the problem of a huge amoount of power belonging to the few people who run the financial system. Huge consentration of power is not a good thing. Power corrupts and so on. Crypto puts everyone on equal footing - rather than say the people/companies who have a banking license enjoying an unfair advantage over everyone else (like the power to create money from thin air in the fractional reserve system).
The credit card companies, PayPal and the like get to decide which companies are worthy to exist and which not. If they don't like a business, they can just cut them off from receiving money. E.g. VPN provides who don't keep logs are all banned from receiving credit/debit card payment, PayPal, etc. - they have to resort to receiving cash by post and crypto.
US: https://www.sec.gov/spotlight/cybersecurity-enforcement-acti...
CA: https://www.osfi-bsif.gc.ca/Eng/osfi-bsif/med/Pages/20221116...
EU: https://www.bafin.de/EN/Aufsicht/FinTech/Geschaeftsmodelle/D...
and so on.
I hope that even if you love the current financial system, you'd still be in favor of giving its competitors a chance to exist.
Money laundering, drug dealing, scamming old people, these things have all existed well before cryptocurrency.
Arguing that central banks and a few other non-elected decision makers should be able to influence our lives by devaluing our savings is... insane. It's Stockholm syndrome really.
A few wealthy people decide your money should be worth less because a bunch of other wealthy people have made bad decisions for decades and now there's too much money floating around. Coincidentally, the interest rate adjustments won't tangibly affect the wealthy people! That's not something I want to continue to support.
What’s your solution?
Each medium of wealth storage has tradeoffs, so being categorically opposed to one type because of ideological principles seems suboptimal to me.
For example, fiat may be subject to devaluation, but is stable, widely accepted, highly liquid and (cash) is anonymous.
Bitcoin is subject to speculation, so prices are highly volatile, amongst other downsides.
Land tends to maintain or grow in value, subject to interest rates, tax environment, and adjacent developments, and is very illiquid.
Perhaps, but a currency that devalues based on news, scams, pump & dump schemes, and so forth isn't the solution. Crypto doesn't transfer the power of value to you, it transfers to people with a big enough following - or botnet - to amplify whatever news (false or not) that impacts their crypto the way they want it, up or down.
Your premise is reasonable, but your conclusion doesn't logically follow from it.
This is an accurate characterization of the dollar as well.
A common theme in all the cryptocurrency hate is that crypto enables scams, drug deals, etc. It's value fluctuates because of the decisions of a few bad actors. The dollar and every other central bank currency also have these issues.
The dollar recently peaked around a 9% inflation rate.
The euro peaked around 10%.
I could also make an argument that these numbers are actually understated but that's not the point. These are supposedly stable currencies. A person who has saved up ~100K Euros by January 2022 now only has ~90k Euros in January 2023. That's some pretty significant volatility. Unfortunately, the central bank currency's never go back up in terms of purchasing power. They only go down.
These inflation rates are policy failures. But positive inflation is policy. Cash isn’t designed to hold value over time. We have other instruments for that. And the notion that one should have stable value transport across time for free is a bit ridiculous, as well as economically destructive in basic ways.
Not in the way you're saying - it's a matter of degree. When Theranos scammed hundreds of millions, the dollar didn't drop in value, nor has that ever happened.
You seem to have unconventional definitions of "stable" and "volatile". Calling a 10% devaluation in 1 year volatile is laughable compared to crypto. For example BTC -65% in 1 month (1/6/18 to 2/6/18) or how about TerraUSD, -80% in less than 1 week, 5/9-5/14/22.
Fiat and crypto aren't even in the same galaxy when it comes to volatility.
And? Is it even coming close to the volatility of the most popular coins?
> Unfortunately, the central bank currency's never go back up in terms of purchasing power. They only go down.
With good reason! Deflation is one of the greatest worries in any economy.
It's the same reason why free-as-in-anarchy speech social networks become far right cesspools [1], you have little reason to switch unless you're someone who's been kicked off the major platforms.
[1] I really don't mean to pick on the right wing nutjobs, it's just that the "far left" doesn't exist in the US so you don't find groups pushing for violent worker uprisings, seizing control of industry, and significant wealth redistribution.
Who needs freedom of association except for troublemakers?
Who needs the fourth amendment except for criminals?
This applies to both kinds of drugs, by the way. Online black market shops selling generics from India also use crypto heavily.
I don't know if it will ever be displaced because there are so many irrational people in the space, but whatever happens with crypto, I hope consensus mechanisms that aren't energy-hungry displace proof of work.
Bitcoin's power consumption is just appealing to the religious aspect of the network : if we changed it, it would go against the original design. Even though it burns 1% of world energy consumption for that stupidity.
One of the only valid points of crypto is separating money from the government.
However, its proponents emphasize obscure benefits that make it look more obtuse than it should. As they stand, cryptocurrencies, in the eye of the general public, look either like a Ponzi scheme, free money, or too convoluted to bother, as they solve nothing other technologies don't solve already.
It looks like you've just answered your question right there.
> It looks like you've just answered your question right there.
Eh... Yes, indeed they did. Only, not in the way it appears you thought they did: Look up the word “inextricably”. Yup, money can't be separated from government – if it could be, whoever now ran money in stead of the old government would in effect be the new government.
Hard to say if even trying is more evil than stupid or the other way around, vut that doesn't matter much, now does it?
I believe this is why a lot of people fall for the blockchain trap, it's interesting on an academic level, so they come to the conclusion that there must be value in there in there somewhere.
How do you create a shared transaction ledger without a central point of failure and control?
How is this not exactly what I was referring to? (solving an academic problem rather than a real world problem)
It's almost always pull from my branch on the centralized repo, not pull from my repo at this unrelated host.
If they had some magic way of handling transactions so every node didn't need to keep all history, and nodes could be sharded in a hierarchy like DNS, etc. transactions times were near-instant and almost-free, etc. then it'd be a lot more useful.
This is very outdated commentary. Cryptocurrency's get better at scaling every year.
Bitcoin was the first, so naturally it is the slowest. Transactions per second (TPS) is around 5.
Ethereum, which released a few years after Bitcoin is around 30 TPS.
There are newer crypto's like Loopring that can currently do 500 TPS.
Ethereum 2.0, is aiming for 100,000 TPS.
[1]: https://crypto.news/solana-transactions-per-second-hit-an-al...
Is it too difficult to do by yourself? Yes.
Will it damage your floor? Yes.
Will it damage the refrigerator? Yes.
But I don’t think it’s bullshit because it does solve a real problem - killing the fly.
the bullshit part refers to just that, pretending that the refrigerator could be an appropriate good solution, when in fact can't actually even perform the task
The operative word here is "people". People are better judges of what other people want. And what people want is to make a quick profit in cryptobucks, and convert it into something they can buy real things with, preferably without a lot of transaction fees.
Crypto does not understand this, because it is a rigid top-down system that only works on the assumption that there is no fiat off-ramp, and crypto is the only currency being used. But that's not reality; in reality, people would not care about crypto if they didn't think it would make them rich in 'real money' terms.
I want to send money to someone: I should be able to do so (i) instantly (message passing at light speed), (ii) at 0 cost (price of electricity), and (iii) without asking anyone for permission. Crypto failed miserably to achieve this. Furthermore, it has allied (or been rallied) with the "enemy"; crypto enthusiasts regard it as "good for Bitcoin"™ when banks announce investment in the crypto space. It is now a project unable to dream a future for itself beyond "hodl".
[1] https://www.frbservices.org/financial-services/fednow
[2] https://www.irs.gov/tax-professionals/choosing-a-tax-profess...
It’s intentionally mediated through banks. We don’t want to create a money-laundering system—that is an explicit lesson learned from crypto. (We also want a layer that can absorb fraud. Another lesson from crypto.) But there are banks who will API it for KYC’d clients.
Is crypto kept alive on evangelism? Yes.
Not really that useful at the moment (and maybe never will be)? Yes.
Has lots of pump and dump, scams, bad people doing bad stuff? People who have no clue what they’re talking about spewing bullshit? Resounding yes.
But I don’t think it’s bullshit because it does solve a real problem - verifying transactions independently. But of course there are trade offs with this, such as bitcoin’s power consumption. The disconnect comes from crypto people misjudging the world. The current financial system simply isn’t so bad to require all the weird trade offs of crypto.