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>Crypto has no intrinsic value, it pays no dividend and doesn’t give you proxy rights, just like all the tech equities. Tech companies return money to their investors via buybacks. Most investors prefer this as they get to choose when they get taxed.
A better comparison would have been national currency. A piece of paper has no intrinsic value, pays no dividend, and gets diluted over time.
Another point I’d add: isn’t it telling that we haven’t come up with use cases for crypto that aren’t in some way speculation in the last decade plus?
I mean, I can even see that in reputable payment services like Stripe, BitPay and Coinbase Commerce in the future.
First off, it is factually incorrect to say that transaction costs are higher than traditional banking. In fact, costs on some blockchains are negligible when compared to traditional banking fees -- literally fractions of a cent for moving large sums of money.
Moreover, it is very liberating to be free of banks, with all of their absurd controls, endless gouging, and inconvenience. Admittedly, in the beginning, it is somewhat scary to trust blockchains, but one gets over that fear very quickly and apps and services keep improving to make it easier and safer. It's not ready for grandma yet, but grandma may have a hard time with her normal bank app right now anyways.
Furthermore, blockchain based Web 3.0 technology with a wallet that automatically recognizes your account without having to ever enter a password or username actually solves a big problem and greatly improves the experience on most websites.
We can debate the philosophical merits of decentralization versus centralization of financial systems until the cows come home, but for me, the benefits of decentralization outweigh the costs.
Without getting into too much detail, the main ones for me are: Freedom over my money. Protection from inflation (since some coins limit supply). Transparency of markets (all transactions are public on the blockchain).
Also, I believe that for most governments there are real benefits to using crypto. After all, the transparency of public transactions facilitates taxation and the implementation of policy. In the long term, it should actually help to curb money laundering, rather than facilitate it. It is very easy to corrupt a banker. It is near impossible to corrupt the blockchain data. Also, in our complex financial system, blockchains and smart contracts can also unlock a lot of value that is currently trapped in our legal, administrative, and bureaucratic systems. Just solving the problem of custody of financial instruments, would unlock incredible value in the economy.
With regards to centralization, I suspect that the real argument that this author is trying to make -- and it really shows his bias -- is that the US should not/won't allow crypto to really gain mass adoption because it threatens its hegemony (the petro-dollar, World bank, dollar as the world's store of value, etc.).
The author ignores that for a lot of the world, solving inflation is a much bigger problem than maintaining central bank control. He assumes that US influence/control over world economics/affairs is a good thing. I'm American, but I don't buy that argument at all. It is manifestly unfair and illigical to ask the world to use the dollar as a store if value and then print trillions of dollars whenever banks or other bad economic actors crash the US economy. Think also of the damage that the petro-dollar has caused the environment, delaying the onset of renewable energy while even facing global catastrophe.
These are just some thoughts off the top of my head.
Lastly, I want to add that for me the most exciting thing about blockchain technology is the disruption and innovation that it will cause in many industries. NFTs are a great example, but just one. Defi is another. There is massive innovation going on right now in defi. New models for lending, raising capital, etc etc. Models that could probably never work with centralized control and current transaction technology. Granted it's something of a totalky deregulated Wild West right now, but there will be winners who may become (in size, hopefully not in spirit) the Amazons and Bank of Americas of tomorrow.
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Or gold. Or any other property. Bitcoin is simply digital property. And like real world property, you can mess up and lose it irrevocably. If you give your gold to the wrong person or drop it to the bottom of the sea, you're probably not getting it back. If you under fund your military, and someone else comes in and takes control of your land, you're probably not getting it back. If you send your bitcoin to the wrong…
But bitcoin isn't being billed as a value-store like gold, it's being sold more as a replacement for payment systems like credit cards, ACH transfers, or PayPal. There is a reason nobody goes around trading tiny bits of gold for goods and services. It is useful to have an abstraction that makes transactions easier and helps mitigate risk.
This used to be the case years and years ago but it's been understood that without some additional layers this will never be the case. It is being billed as a value-store like gold by large institutions on and off of Wall Street though, so that's far more likely (and to be fair has proven to be fairly stable for a few years now).
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> One of the biggest drawbacks for blockchain is that transactions can't be revoked after the fact You can transfer money to an escrow smart contract that reverts the transaction if a third party confirms malicious activity. > They can block transactions if they think it's stolen, and if I report it as stolen I can claw back money from fraudulent purchases. Certain DLTs allow you to secure your account with SSI/DPKI…
I think what a lot of people miss is that cryptocurrencies are different than blockchains. But also that cryptocurrencies can both work exactly like modern money (opposed to cash) but that this system is still new (e.g. DeFi: Decentralized Finance). Not only can you do smart contract escrows, but there's nothing stopping anyone from doing DeFi and having the exact same functionality as a credit card. You can also tak…
A related thing that's bonkers to me is how much progress there has been in ZK cryptography.
But people just dismiss the field, saying "ZK existed since the 80s it's a fad", and post yet another Bruce Schneier article.
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The same flaw applies to cash. If you give someone $5 there is no way to revoke that transaction. You only can ask them to make a new transaction and give you the $5 back. Just like how additional layers were built on top of cash,new layers will be built on top of cryptocurrencies leading way to the "crypto 2.0" you are waiting for.
I don't usually mail physical cash to online retailers when I make a purchase. The context of your typical cash purchase precludes most of the outlined scenarios where being able to undo a transaction is a desirable feature.
Another point I’d add: isn’t it telling that we haven’t come up with use cases for crypto that aren’t in some way speculation in the last decade plus?
ENS [0] seems to be a use case here [1][2] and even the concept can be used by merchants for users to donate / pay towards verified names e.g: (myshopname.eth) rather than 0x123..cdef. That still isn't an example? I mean, I can even see that in reputable payment services like Stripe, BitPay and Coinbase Commerce in the future. [0] https://ens.domains [1] https://www.skiff.org/updates/skiff-ens [2] https://www.skiff.o…
ENS/wallets give users a lot of utility on Skiff - it makes logging in to privacy-first platforms easier (manage on secret key/seed phrase), sharing easier (ENS vs. an address), and decentralized storage can be nice if you don't want your data hosted on big tech.
Is there a market to short crypto?
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Flip it. Why should they trust anything else? They don't, so crypto being untrustworthy doesn't particularly stand out from the stock market, where you can also easily fuck up and lose your shirt without ever quite understanding what you've gotten into. See: options.
My bank account is insured by the government up to 250k. To trust the banking system is to trust the government.
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>Crypto has no intrinsic value, it pays no dividend and doesn’t give you proxy rights, just like all the tech equities. Tech companies return money to their investors via buybacks. Most investors prefer this as they get to choose when they get taxed.
Some do, Apple is notable for this. If Uber’s done one I missed it. FTX burns FTT when they have a good quarter, with roughly the same zero accountability to do so as a FAANG with a God Emperor CEO running a dual-class share structure. Neither of these things are backed by guys with guns who come to your house if you fail to pay taxes in them.