Crypto is an unproductive bubble • Hacker News Board

Re: Crypto is an unproductive bubble

#241

Post by tootie » Sat, Mar 19, 2022, 2:53 AM UTC

randomhodler84 wrote: post #232

tootie wrote: post #47

Earlier quoted context omitted.

Bitcoin is vastly worse than fiat. Like orders of magnitude. Bitcoin at this point isn't even currency. If it were, it would be in a cataclysmic deflationary spiral. Instead it's an investment vehicle. One backed by absolutely nothing. The Bitcoin market is 100% rents and 0% utility. Arguably negative utility because of the massive climate costs involved in mining. On the flip side, central banks managed to dig us ou…

I feel like you live in an imaginary world where the data doesn’t fit reality: https://usdsat.com/ Fiat is going to ZERO. All fiat currencies. I’d you fail to see the utility now at year 13, I hope you will not let another 13y pass.

Zero what? Zero purchasing power? No, it is not.

Re: Crypto is an unproductive bubble

#242

Post by dragonwriter » Sat, Mar 19, 2022, 2:54 AM UTC

anon2020dot00 wrote: post #210

benreesman wrote: post #43

How many times are we going to have this conversation? Yes crypto is an asset bubble, alongside equities, real estate, precious metals, you name it. Money printer go brrrr, more dollars are chasing the same amount of Apple sells iPhones. Crypto has no intrinsic value, it pays no dividend and doesn’t give you proxy rights, just like all the tech equities. Proof of work burns a lot of electricity, though this is compli…

Stop equating crypto with stocks please. Stocks represent ownership so just by that virtue, it has intrinsic value.

> Stocks represent ownership

Stock represents specific rights (which may differ across classes) typically including a claim on assets at dissolution.

Re: Crypto is an unproductive bubble

#243

Post by heavyset_go » Sat, Mar 19, 2022, 2:54 AM UTC

Nextgrid wrote: post #145

Cryptocurrencies have a valid but very specific use-case: being able to transact in a hostile environment. It does so by making certain trade-offs such as an energy-intensive verification process. This is a very valid use-case when you need to transact against the will of a powerful adversary such as governments. It needs to be there and needs to be protected just like free speech needs to be protected. However, day-…

> Cryptocurrencies have a valid but very specific use-case: being able to transact in a hostile environment.

You'd be lucky to have working computers, power sources and internet connections in a hostile environment. Cash and physical assets are king in that domain.

Governments can order exchanges to halt trading and liquidation, or demand haircuts, and 99% of people who hold cryptocurrency won't be able to do anything about it.

Re: Crypto is an unproductive bubble

#244

Post by danShumway » Sat, Mar 19, 2022, 2:55 AM UTC

stale2002 wrote: post #240

danShumway wrote: post #214

Earlier quoted context omitted.

If you're trying to build a functional currency, you can't really afford to say that the majority of people earning and spending money are "not the target audience." That's not how currency works, people have to want your coins for you to spend them. At best, having this perspective relegates Bitcoin to be nothing more than a speculative asset/investment. But if you want it to be more than that and you're just scoffi…

> That's not how currency works, people have to want your coins for you to spend them. The year is 2011. Visa and Mastercard have denied everyone the ability to donate money to wikileaks, despite the fact that they were not charged with any crimes. And yet, back then, I could still send them bitcoin. So yes, actually, even though only a small subset of people actually used bitcoin (especially back then!), it provided…

People could send Bitcoin to Wikileaks in 2011 because there were mechanisms to turn that Bitcoin back into real money.

A point that's been raised multiple times elsewhere on this page is that Bitcoin has no backup strategy for when exchanges start getting targeted. It's not a good anti-authoritarian tool because the ability for it to be converted into a usable form exists at the pleasure of governments, who are increasingly looking at regulating exchanges.

Sure, you can send Bitcoin to people who want Bitcoin. Great. The question is, who is going to want Bitcoin under an authoritarian regime if it can't be easily converted into a spendable currency for real goods and services? Does Bitcoin survive when it has to be spendable on its own? Because at that point it's not just Wikileaks that has to accept it, the people/businesses that Wikileaks is buying from and transacting with have to accept it as well.

There's a difference between a currency and transfer mechanism. Bitcoin right now works (somewhat, kinda) as a transfer mechanism because exchanges exist and because people trust it as a transfer mechanism for other currencies.

Re: Crypto is an unproductive bubble

#245

Post by Animats » Sat, Mar 19, 2022, 2:56 AM UTC

Nextgrid wrote: post #145

Cryptocurrencies have a valid but very specific use-case: being able to transact in a hostile environment. It does so by making certain trade-offs such as an energy-intensive verification process. This is a very valid use-case when you need to transact against the will of a powerful adversary such as governments. It needs to be there and needs to be protected just like free speech needs to be protected. However, day-…

Cryptocurrencies have a valid but very specific use-case: being able to transact in a hostile environment.

Yes. In the early days, people were thinking retail sales of illegal drugs. That turned out to be a petty cash application. What really powered Bitcoin usage was getting money out of China despite exchange controls. There have been disclosures in recent years which established that the money laundering sector was much larger than previously thought.[1][2][3] Just a fraction of that moving through the cryptocurrency system may account for most of the growth in Bitcoin.

[1] https://www.icij.org/investigations/panama-papers/

[2] https://www.icij.org/investigations/paradise-papers/

[3] https://www.icij.org/investigations/pandora-papers

Re: Crypto is an unproductive bubble

#246

Post by paulpauper » Sat, Mar 19, 2022, 2:57 AM UTC

Nextgrid wrote: post #145

Cryptocurrencies have a valid but very specific use-case: being able to transact in a hostile environment. It does so by making certain trade-offs such as an energy-intensive verification process. This is a very valid use-case when you need to transact against the will of a powerful adversary such as governments. It needs to be there and needs to be protected just like free speech needs to be protected. However, day-…

All you are doing is transferring bits from a sender to recvier. to turn those bits into usable cash requires an offramp, and that is where regulation comes into play.

Re: Crypto is an unproductive bubble

#247

Post by nrr » Sat, Mar 19, 2022, 2:57 AM UTC

Nextgrid wrote: post #145

Cryptocurrencies have a valid but very specific use-case: being able to transact in a hostile environment. It does so by making certain trade-offs such as an energy-intensive verification process. This is a very valid use-case when you need to transact against the will of a powerful adversary such as governments. It needs to be there and needs to be protected just like free speech needs to be protected. However, day-…

The irony in this is that the Citizens United ruling, at least in the US, affirmed that spending money is speech. It's actually one of the reasons why I'm an ardent supporter of postal banking. Since the USPS is an arm of the federal government, it must work within the confines of the First Amendment[0].

As it stands, I remain pretty unconvinced that cryptocurrencies writ large solve this kind of (at least, what I call) "borderless" free speech problem today. They simply don't do enough to frustrate the state or the incumbent banking institutions, mostly because they aren't actually peer to peer enough where it counts. Notably, I can't transact with other people on the network with only my smartphone or a small computer communicating 1000's of kilometers over the radio using digital modes without also relying on, e.g., an exchange to act as an intermediary.

How do these systems handle large-scale network partitions where an entire geographic region stops announcing its prefixes to the wider Internet but continues to process transactions and append to the blockchain within its borders? Does the blockchain fork? How is that fork resolved? (Is it ever resolved? The existence of Ethereum Classic implies to me that it isn't, or at least isn't required to be, and I find that prospect frankly frightening.)

The tank analogy is quite apropos, I find. Without a convoy of trucks bringing in fuel, the tanks stop. An adversary powerful enough to sever your connection to the outside world (whether in terms of electricity to keep things going or network connectivity) for the purposes of transacting seems like quite the Achilles' heel.

[0]: Modulo other rulings. Modulo the impartiality of SCOTUS.

Re: Crypto is an unproductive bubble

#248

Post by juanci_to » Sat, Mar 19, 2022, 2:58 AM UTC

deet wrote: post #205

Nextgrid wrote: post #145

Cryptocurrencies have a valid but very specific use-case: being able to transact in a hostile environment. It does so by making certain trade-offs such as an energy-intensive verification process. This is a very valid use-case when you need to transact against the will of a powerful adversary such as governments. It needs to be there and needs to be protected just like free speech needs to be protected. However, day-…

Seems like wishful thinking to me. Unless crypto becomes actually useful for real world transactions, it has to be converted to fiat currency for use, and all the exchanges or technologies that do that conversion are subject to the will of governments. There was literally a post on HN today in which a government proposed to curtail crypto transactions for entities it considers hostile: https://www.coindesk.com/policy…

I agree with everything you said except a couple of things.

>Unless crypto becomes actually useful for real world transactions, it has to be converted to fiat currency for use, and all the exchanges or technologies that do that conversion are subject to the will of governments.

This is true, except that in some places governments are too inefficient to even control those things. The IT people works for them for pennies, and got there because they are the cousin of some politician. They are also not very capable, otherwise they would work for someone who paid them better and on time. I'm using my country as an example, where people trade them for money in fintech wallets and not banks, since they are more difficult to control despite also having a KYC process.

>Governments are powerful and to think that crypto or anything in the internet space is resistant to that power in the most extreme situations is not wise.

Other decentralized technologies simpler than cryptocurrencies prove this to be wrong. And I'm talking about torrents and some other kinds of P2P networks.

Those things are used mostly for piratery, they make companies lose money, so there's an incentive for governments to take them down, yet they fail to do so. On the other hand, crypto is seen as an investment by people who actually own a lot of money. Investors from big banks sometimes have at least a very, very small portion of their portfolios on it because it would be dumb to not take that risk for just a small amount of money they can afford to lose. So a government might not be that much focused into taking it down since a lot of "important" folks of the business industry are on it too

The only thing I think the US government might be truly worried about are the so-called stablecoins. Having an alternative to the USD is risky for their monetary control, since the supply can be artificially expanded with cryptos like UST which is a decentralized stablecoin, instead of centralized and backed by real dollars

Re: Crypto is an unproductive bubble

#249

Post by nostrebored » Sat, Mar 19, 2022, 3:00 AM UTC

anonporridge wrote: post #203

Nextgrid wrote: post #145

Cryptocurrencies have a valid but very specific use-case: being able to transact in a hostile environment. It does so by making certain trade-offs such as an energy-intensive verification process. This is a very valid use-case when you need to transact against the will of a powerful adversary such as governments. It needs to be there and needs to be protected just like free speech needs to be protected. However, day-…

Case in point, marijuana and sex work/pornography, even where legal, are very often not permitted in the financial system and often have to deal directly with physical cash, and of course were some of the early adopters of cryptocurrency. You don't have to find either of these use cases acceptable to understand the risk at play when the financial system can be used as a mechanism of control used to try to snuff out t…

In both of these equations you’re expecting a payment rails at the time of transaction to understand both the product and the regulatory environment for that product at a given location. This is unreasonably complex.

What you’re asking for is a way to make these disproportionately illegal transactions on demand at scale. This isn’t a position on technology, it’s a position on government.

Re: Crypto is an unproductive bubble

#250

Post by babypuncher » Sat, Mar 19, 2022, 3:01 AM UTC

goldcd wrote: post #71

babypuncher wrote: post #49

Earlier quoted context omitted.

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.

I don't think that's true. Credit cards, paypal and all the rest existed before bitcoin. I mean it's nifty that I can do it without a single intermediary authority, but it's not that special. I think the lack of revocation available to bitcoin is a (and I had myself for saying this) 'a feature'. If somebody sends me payment in bitcoin, I definitely know it can't be charged-back for example. It's like sending cash in…

But there are far more consumers than there are sellers. Any system that is tilted in the seller's favor as opposed to the consumer is naturally going to have a hard time becoming the standard. This is at least in part why PayPal has been so enormously successful. It puts the customer's mind at ease.

The way I see it, people with money want to drive crypto adoption because it will tip the balance of power further in their favor. A fully unregulated currency and transaction system can be much more easily controlled by the people with the most capital without having to let that pesky democratic process getting in the way by letting the poors have a say.