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Ethereum: A Store of Value with Cash Flow [pdf]

ethereumcashflow.com

281–290 of 302 posts

Re: Ethereum: A Store of Value with Cash Flow [pdf]

#281

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>>The only killer app of decentralization as of today is the ability to give people peace of mind that the unit of account they use to store their wealth cannot be tempered with by anybody. Being able to use a tamper-proof currency in financial applications that are decentralized means one's holdings of that currency remain tamper-proof even when they are employing them in financial applications. That is the value th…

> financial applications Legacy financial applications are fine. People who are afraid of inflation just convert BTC>USD the sole amount they need to use the financial application and that's it. Also DeFi apps are very illiquid and extremely complicated to use. Finally let's not hide the truth: 99% of financial apps are based on loans. Crypto loans are doomed because people don't want to borrow crypto as they anticip…

>>Legacy financial applications are fine.

They are not at all. Governments and financial institutions can lock funds, do 'hair cuts', as they did in the European financial crisis, and engage in other such shenanigans. They can debank or otherwise exclude people and companies from the payment system, or refuse them banking services at all.

But really, your statement says it all. This is what anti-Ethereum advocacy amounts to: advocating for the legacy financial system, and the one Satoshi Nakamoto specifically criticized, including in the Bitcoin white paper:

https://www.bitcoin.com/bitcoin.pdf

"Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model. Completely non-reversible transactions are not really possible, since financial institutions cannot avoid mediating disputes. The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for nonreversible services. With the possibility of reversal, the need for trust spreads.

Merchants must be wary of their customers, hassling them for more information than they would otherwise need. A certain percentage of fraud is accepted as unavoidable. These costs and payment uncertainties can be avoided in person by using physical currency, but no mechanism exists to make payments over a communications channel without a trusted party. What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party. "

>>Also DeFi apps are very illiquid and extremely complicated to use.

Uniswap had $10 billion in trading volume over the last week. That's in the same league as major exchanges like Bitfinex and Kraken. It's also extremely easy to use, with no sign-up/registration required, and a trade being possible with 3 clicks.

Re: Ethereum: A Store of Value with Cash Flow [pdf]

#282

Earlier quoted context omitted.

Calling it 'Etherium' to provoke Ethereum advocates is completely inappropriate as per HN rules.

So is assuming bad faith against HN rules. Etherium seems like an innocent error.

This user has commented on Ethereum posts numerous times, and I have actually corrected them on the spelling in the past. That this is deliberate provocating/trolling is not an assumption.

Re: Ethereum: A Store of Value with Cash Flow [pdf]

#283

Earlier quoted context omitted.

You get much greater interoperability / a much larger market when everyone is on the same ledger, using the same protocol to exchange value. There are use-cases where a smaller more specialized ledger will be more optimal, but there is a very large set of use-cases for the 'financial protocol with a huge number of users'.

It's like this currently, but it doesn't have to stay that way. You could have multiple cryptocurrencies which support the exact same public API and clients could figure out their relative values automatically by crawling DEX markets (looking at current prices and daily trade volumes). People who do business internationally are already used to the idea of accepting payment in multiple currencies - With the right set…

>>You could have multiple cryptocurrencies which support the exact same public API and clients could figure out their relative values automatically by crawling DEX markets (looking at current prices and daily trade volumes).

Transmitting between ledgers is associated with a cost, due to the capital requirements that make inter-chain bridges possible.

Look at the current attempts at such bridges, like Connext: they require individuals to run 'routing' nodes that faciliate inter-chain transfers by locking collateral in multiple chains to act as liquidity. There is a cost to this, that doesn't exist when two parties are transacting on the same ledger.

Re: Ethereum: A Store of Value with Cash Flow [pdf]

#284
post #276

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Utility? The transaction fees are around $30 USD now.

Fees are a function of supply & demand. High fees means there's tons of demand to use the chain. Yes, it sucks for small users who are priced-out, but scaling solutions such as rollups should be launching within the next few weeks.

It isn't small users who are priced out so much as almost every use case other than speculation.

Anything that does not allow more transaction throughput doesn't help.

Re: Ethereum: A Store of Value with Cash Flow [pdf]

#285
post #156

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The government prints money and buys government bonds with it. And other assets. When you have infinite amounts of money, you can dictate the risk premium.

> When you have infinite amounts of money, you can dictate the risk premium. But how? If you're an investor who is considering buying government bonds, how can the government dictate the interest rate that you are willing to accept in return for buying the bonds?

read up on yield curve control. https://www.stlouisfed.org/on-the-economy/2020/august/what-y...

Basically: central bank has infinite money and buys all the debt at 0%, and outbids everyone else.

Simple.

Re: Ethereum: A Store of Value with Cash Flow [pdf]

#286
post #191

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I struggle to have any sympathy for "the little guy". Noone's lying to them, noone's defrauding them, noone's stealing anything or embezzling from them. It's just greed, plain and simple. If you pile into a get-rich-quick scheme but end up holding the bag in, then more fool you. I still think it should probably be regulated to prevent idiots from losing their life savings. But I won't pretend the losers are ethically…

This is such a simplistic view of “the little guy”. The dollar system is set up such that they have to ‘invest’ or else they will never be able to afford a house. Savings will bankrupt them. Stocks are meaningless, just handing your money to rich people that will never give it back in hopes that you can sell it for more later. But the whole system looks like it’s in free fall, so that doesn’t seem likely. Crypto woul…

>The dollar system is set up such that they have to ‘invest’ or else they will never be able to afford a house. Savings will bankrupt them.

This is what happens when inflation is low, yet people consider inflation the devil. If the Fed could actually hit inflation goals this whole farce would be over. We'd be at the end of the long term debt cycle and a whole lot of fake value would disappear into thin air and after all the bad debt and bad companies have been cleaned up, there would be enough room for productive companies.

Re: Ethereum: A Store of Value with Cash Flow [pdf]

#287

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> Crypto would have zero value if normal people weren’t scared and distrustful. That implies cryptocurrencies provide no value by themselves and is simply false. Ethereum is essentially a distributed virtual machine that anyone can pay to use. Monero offers complete financial privacy.

What sort of operations are people running on the Ethereum VM?

I've seen interest bearing crypto accounts. You can get 6% APY on stablecoins. Any project that promises you more than that is calculating APY for the current day or hour. 40% APY for less than a single day is just misleading advertisement.

Although I am generally against cryptocurrencies, I cannot be against the idea of building a decentralized banking system (cryptocurrencies are merely cash). I mean, if we get to do it with fiat, they surely deserve to do it with their cryptocurrencies.

Re: Ethereum: A Store of Value with Cash Flow [pdf]

#288
post #151

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Exactly, Ethereum is a better Store of Value than Bitcoin, not only because it is scarce, but because it provides utility, which creates demand. People need ETH for: * Paying transaction fees to use the network. For example, Visa is now settling payments with card issuers using USDC on Ethereum, so Visa needs to pay these fees with ETH. * Collateral in financial applications: Over 11 million ETH (over $24 billion) ha…

Utility? The transaction fees are around $30 USD now.

Presumably someone receives more than $30 in value from these transactions, otherwise they wouldn't be willing to pay them.

Re: Ethereum: A Store of Value with Cash Flow [pdf]

#289

Earlier quoted context omitted.

The drawings I made as a kid are very scarce, but completely worthless. Demand is what creates value, not scarcity, although scarcity has an amplifying effect

Scarcity is also not something that you want from a currency, fundamentally. A currency needs to be abundant when needed, and scarce when oversupplied. That's the point of controlling the money supply based on economic growth rates, and the entire reason we have a Fed. I believe strongly that cryptocurrencies have a strong future, but what is really needed is a crypto that automatically manages its money supply. In t…

>Scarcity is also not something that you want from a currency, fundamentally. A currency needs to be abundant when needed, and scarce when oversupplied. That's the point of controlling the money supply based on economic growth rates, and the entire reason we have a Fed.

Yes, we mold the currency to our needs, that's why we have abandoned gold. This is one of the reasons the euro is completely flawed. Each eurozone country has different needs, yet there is only one currency that can only be controlled for the eurozone as a whole. Without further political integration it is not possible to actually give each country what it needs. Some countries need a weak currency, some need a strong currency. Paradoxically, the euro is both too strong and too weak at the same time.

Re: Ethereum: A Store of Value with Cash Flow [pdf]

#290
post #134

Earlier quoted context omitted.

Scarcity is also not something that you want from a currency, fundamentally. A currency needs to be abundant when needed, and scarce when oversupplied. That's the point of controlling the money supply based on economic growth rates, and the entire reason we have a Fed. I believe strongly that cryptocurrencies have a strong future, but what is really needed is a crypto that automatically manages its money supply. In t…

> automatically manages its money supply. that's an interesting question and premis - automatic monetary policy. I wonder if good monetary policy could be encoded as a set of rules that can be followed by a machine.

The problem is that we heavily depend on "oracles" in the real world, namely government published statistics and those could be manipulated, even if monetary policy was automated.
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