The cryptocurrency bubble is strangling innovation? • Hacker News Board

Re: The cryptocurrency bubble is strangling innovation?

#41

Post by api » Mon, Jan 08, 2018, 5:25 PM UTC

pyb wrote: post #34

api wrote: post #19

There's another issue that I don't see mentioned much here. I was contemplating writing a blog post about it. Over the past year I've seen a serious decline in early stage angel investment. I've talked to a lot of people who have said similar things. What I've heard and in some cases observed is that it's all going to crypto. All the people who would be making speculative angel investments are now buying into cryptoc…

Furthermore, we're starting to see that all those crypto startups have made so much money from their ICOs that they're starting to distort the job market as well. The kind of engineers who'd be naturally drawn to smaller startups and didn't want to work for Google or Facebook, are now being attracted to the crypto space in ever greater numbers. For that reason, it will become even harder to start a non-crypto startup…

Yet what have any of these startups delivered other than tools for the crypto world? The whole thing seems almost 100% self-referential. It's like a financial MMORPG.

Does the crypto world have anything to offer the real world?

Personally I've only seen one common use case: currency and wire transfer. As the OA correctly points out this use case is being harmed by currency hyper-deflation and fee inflation. Even the black market use case is faltering for these reasons.

Few ICO projects are even usable. Most don't even exist. Of those that are usable I can off the top of my head think of only one that seems to have any utility that doesn't recurse into crypto: Siacoin. Siacoin apparently works but it's not a compelling alternative to Amazon S3 or Backblaze, so its utility is minimal at best.

Re: The cryptocurrency bubble is strangling innovation?

#42

Post by overcast » Mon, Jan 08, 2018, 5:25 PM UTC

dragontamer wrote: post #13

No? Because before cryptocurrency, dumb money was in dumb apps like "Yo". The problem isn't cryptocurrency or fads. Its stupid investors spending money on stupid things. I mean, its fine, its their money and all. But obviously, if investors spent the money on more useful things, it'd be better innovation for everyone (and those investors would surely get better returns). At the moment, we're in an "everything bubble"…

People aren't investing in cryptocurrency, I don't care what /r/bitcoin has to say about it. People are speculating in hopes of making a lot of money off of a bigger fool.

Re: The cryptocurrency bubble is strangling innovation?

#43

Post by DennisP » Mon, Jan 08, 2018, 5:26 PM UTC

He claims the gas price mechanism doesn't help Ethereum because the fee market is driven by supply and demand. Of course it is, but that supply and demand is independent of the ETH price; it will govern the real cost of fees and that will be translated into some amount of ETH depending on the ETH price.

We can see this when network usage drops, or the gas limit increases. Fees drop to low levels in dollar terms, even if the ETH price stays up.

There is one way that the ETH price sets a minimum on gas costs: miners race each other to make blocks, processing transactions causes delay. The more valuable the block reward, the higher the expected cost of that delay, and miners demand compensation for that. But this doesn't seem to be a large effect since gas prices are sometimes quite low. (Full proof of stake would eliminate this race dynamic.)

Re: The cryptocurrency bubble is strangling innovation?

#44

Post by bobcostas55 » Mon, Jan 08, 2018, 5:29 PM UTC

pavel_lishin wrote: post #21

tqkxzugoaupvwqr wrote: post #20

Earlier quoted context omitted.

Counterpoint: “Dogecoin, a parody cryptocurrency, just broke $2B for its market cap” although development stopped two years ago. https://news.ycombinator.com/item?id=16096119

Goatse cryptocurrency.

If you visit the original goatse domain, you will find exactly that. "Meme creation on the blockchain", it says.

Re: The cryptocurrency bubble is strangling innovation?

#45

Post by pyb » Mon, Jan 08, 2018, 5:32 PM UTC

api wrote: post #41

pyb wrote: post #34

Earlier quoted context omitted.

Furthermore, we're starting to see that all those crypto startups have made so much money from their ICOs that they're starting to distort the job market as well. The kind of engineers who'd be naturally drawn to smaller startups and didn't want to work for Google or Facebook, are now being attracted to the crypto space in ever greater numbers. For that reason, it will become even harder to start a non-crypto startup…

Yet what have any of these startups delivered other than tools for the crypto world? The whole thing seems almost 100% self-referential. It's like a financial MMORPG. Does the crypto world have anything to offer the real world? Personally I've only seen one common use case: currency and wire transfer. As the OA correctly points out this use case is being harmed by currency hyper-deflation and fee inflation. Even the…

I am not saying these crypto startups are doing anything useful ! 90% + of them aren't. Which is why their increasing hiring power is getting to be a problem.

Re: The cryptocurrency bubble is strangling innovation?

#46

Post by cantrip » Mon, Jan 08, 2018, 5:33 PM UTC

fortythirteen wrote: post #36

cantrip wrote: post #27

Earlier quoted context omitted.

I don't think it's weird to focus on Ethereum as, as the article correctly states, most new currencies are not a separate chain themselves but are simply tokens on the Ethereum blockchain. Ethereum is also the only blockchain with a real developer community, and the article focuses on building applications. Microsoft didn't abandon Bitcoin because it was overpriced, they abandoned it because it was volatile. One coul…

> Microsoft didn't abandon Bitcoin because it was overpriced, they abandoned it because it was volatile. It was "volatile" when they adopted it. It's now volatile and overpriced. If MS thought that Bitcoin was a good investment, volatile or not, they would have stuck with it. "Volatile" is acting as an excuse for their real sentiment, that it's time to short Bitcoin.

You don't generally hold onto Bitcoin when you take it as payment, you sell it immediately, so no, Microsoft was not "investing" in Bitcoin by taking it as a payment for their products and they're not shorting Bitcoin either.

The volatility is what makes it untenable as payment, as you can't sell it fast enough to ensure that you get the same exchange rate you gave to the customer.

Re: The cryptocurrency bubble is strangling innovation?

#47

Post by temp-dude-87844 » Mon, Jan 08, 2018, 5:35 PM UTC

I fail to see the article's point. Yes, you can spin your own token on top of the Ethereum chain, but with transaction prices so high, as the article notes, what would be the point? If anything, this would incentivize a company serious about deploying an altcoin to form their own chain unbound from anyone else, or give some long and hard thought about whether a centralized server-side DB would suffice.

The people most discouraged by high fees of cookie-cutter coins are the exact sort of low-effort attempts that are trying to capitalize on blockchain mania, instead of leveraging the technology for its specialized merits. This isn't strangling innovation: it's a first-layer filter that separates the wheat from the chaff.

Re: The cryptocurrency bubble is strangling innovation?

#48

Post by Tepix » Mon, Jan 08, 2018, 5:36 PM UTC

paxpelus wrote: post #11

alistproducer2 wrote: post #8

Dapps can be awesome when you want to avoid counter-party risk. Ether Delta is a great example; however, it's super expensive to use ED (every interaction costs $0.80-$1.60) and unless you're playing with a lot of money it's cost prohibitive to use. Even though they had the dns hijacking a while ago, you can still access the market via direct calls to the contract. When it's time to liquidate a large alt holding back…

You may want to have a look on Etherdelta Guard Chrome Extension (FYI: I built it). I open sourced it https://github.com/paxpelus/etherdelta-guard and you can download the plugin here https://chrome.google.com/webstore/detail/etherdelta/beeeoaa... When etherdelta deploys - they call a script of mine that calculates the md5 of their files in github and creates automatically a new version in Chrome Web Store. I use my…

Is there an alternative frontend for etherdelta when the website is once again overloaded? Also are open orders only stored on the website?

Re: The cryptocurrency bubble is strangling innovation?

#49

Post by FLUX-YOU » Mon, Jan 08, 2018, 5:37 PM UTC

fortythirteen wrote: post #15

More than anything, the cost to transact with Bitcoin or Etherium (which this article weirdly focuses on), stagnates mainstream adoption. Sure, I could create my own coin to use as an in-app currency for my project, but why ? A coin is only worth what you can buy with it, and nobody is going to sell anything worthwhile with some random, in-app coin. Even Bitcoin was just abandoned by Microsoft, because it's so overpr…

>stagnates mainstream adoption

Bitcoin/cryptocurrency is stuff for rich and tech-savvy people.

- Folks with stressful and demanding jobs probably won't bother with full-time security measures to protect their wallets.

- The same group won't have time to watch every piece of crypto news about which service or product is possibly bad/hacked (see electrum wallets).

- Extremely high volatility means you need to be prepared to essentially lose the dollar value of your bitcoins.

Rich people can hire someone to do these things. They can also likely afford to lose whatever balance they tie up in bitcoin without affecting their standard of living.

Rich people can also manipulate the price, and mainstream and retail investors are never going to know about that (see: people who bought in at $19k during that hype cycle).

Rich people can afford astroturfing services to spread memes and good morale to pump the price. Rich people likely have significant control over hype cycles and may even be pumping other cryptocurrencies to start diversifying.

Tech-savvy people may have less-stressful jobs or jobs where they can browse the internet to keep up with cryptocurrency news. But at least they can manage the security considerations likely from previous knowledge.

Ultimately, crypto will never really be a product for poor/middle-class people. It's just a terrible idea. You're relying on a system that has virtually no accountability other than businesses dying (and how hard is it really to spin up a new crypto service if you're a rich person?)

Re: The cryptocurrency bubble is strangling innovation?

#50

Post by qaq » Mon, Jan 08, 2018, 5:41 PM UTC

leroy_masochist wrote: post #39

> Look at the dot-com boom. A lot of people lost a whole lot of paper money, but it brought us a cheap worldwide fiber backbone and companies like Amazon and Google. If the point the author is trying to make is that Amazon and Google were made possible by the dotcom boom, and that the collapse of the dotcom bubble was part of the price we as a society had to pay to have the services provided these companies, that's a…

Google bought a ton of dark fiber for cents on the dollar. So the bust did enable Google to develop much more rapidly and with much smaller $ investment.