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In defense of cryptocurrency

blog.cryptographyengineering.com

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Re: In defense of cryptocurrency

#71

Post by DennisP »

pavlov wrote: post #7
j_walter wrote: post #4

Earlier quoted context omitted.

Not really...the fees for Bitcoin, Ethereum and other L2 options are flat fees and are well under Visa/MC fees most of the time. Might want to look at Western Union and the like too...way way under those fees. Current transaction fee (for 1 cent or a billion dollars) Bitcoin - $1.62 per transaction Ethereum - $3.50 per transaction Ethereum L2 - as low as 12 cents https://l2fees.info/ Here are credit card fees by comp…

Well, L2 systems aren't on a blockchain at all, so do they even count? If we get to cherry-pick from whatever money transfer systems exist, it's worth remembering that bank transfers within the Eurozone area are free and practically immediate. What crypto can beat that? Clearly you don't need cryptocurrency to deliver a service that's ideal for consumers, as regulation has achieved it in Europe.

> L2 systems aren't on a blockchain at all

The leading L2s on Ethereum are rollups, which store all transactions on chain in compressed form.

Re: In defense of cryptocurrency

#72

Post by agentultra »

There's nothing to defend. More ink has been spilled by some of the top experts in the field explaining that there is no use case for blockchain technology itself. It's old technology that has been around for a long time. There's nothing unique or special about it.

It's interesting what the pro-regulation crypto-currency shills are advocating for. In the US a couple of pro-crypto senators proposed a bill that would introduce regulation to cryptocurrencies under the CFTC. They avoid classifying these things as "securities" in order protect crypto from stronger regulation. Despite these "currencies" quacking and walking like securities.

This is more like a compromise made by a mob boss with corrupt government officials: we'll agree to your regulation as long as you agree to look the other way. In other words let's make it look legit and I'll keep scratching your back.

What the letters to congress hope to achieve is stronger regulation on what are effectively unregulated securities. If companies want to dabble in crypto-assets let them: they will have to publicly report their activities, disclose their financials, and face the same penalties as those who are caught breaking the rules.

I somehow doubt this is the outcome the crypto industry wants. A number of executives have been hauled to court over money laundering and fraud charges. I suspect a great deal more would follow suit were the government properly informed and willing to go after them.

Re: In defense of cryptocurrency

#73

Post by pavlov »

criddell wrote: post #54
pavlov wrote: post #7

Earlier quoted context omitted.

Well, L2 systems aren't on a blockchain at all, so do they even count? If we get to cherry-pick from whatever money transfer systems exist, it's worth remembering that bank transfers within the Eurozone area are free and practically immediate. What crypto can beat that? Clearly you don't need cryptocurrency to deliver a service that's ideal for consumers, as regulation has achieved it in Europe.

I don't understand why L2 systems are even necessary. There's a relatively well known email exchange between Nakamoto and Mike Hearn in which Nakamoto says: > The existing Visa credit card network processes about 15 million Internet purchases per day worldwide. Bitcoin can already scale much larger than that with existing hardware for a fraction of the cost. If the original design of Bitcoin anticipated Visa-scale tr…

Or maybe Nakamoto was simply full of crap, like people talking up their cryptocurrency schemes tend to be?

Re: In defense of cryptocurrency

#75

Post by matkoniecz »

yieldcrv wrote: post #62
matkoniecz wrote: post #52

Earlier quoted context omitted.

> There is plenty of energy currently out there, currently being wasted for decades, that would cost more to store, and cost more to transport. (...) While proof-of-work can (and does) use it directly on the spot. These are often remote, low infrastructure, areas and so unlike other computationally intensive things, such as a data center this remain almost (or completely) theoretical, vast majority of POW wastes perf…

it's not theoretical and I expect it to also become a larger percentage or the network over the next few years. it occurs mostly for economic reasons, it is somewhat accelerated by the common criticism but ironically mostly irrelevant while getting to the same outcome either way grid-reliant proof of work is probably going to get deprecated. (remote sites typically can connect to a grid to sell their own excess energ…

> it's not theoretical

Can you gave examples of PoW using energy that would be wasted otherwise and is not something like reactivation of shut down fossil fuel power plants?

Re: In defense of cryptocurrency

#76

Post by DennisP »

99_00 wrote: post #59

>Proof-of-stake systems are not perfect: they still lead to some centralization of power, since in this paradigm the rich tend to get richer. What does this mean? Is there a central node in PoS, or are they saying that power is proportional to stake size?

Depends on the PoS design. Some have a limited number of stakers, or give stakers voting rights in an on-chain governance system. Neither is true of Ethereum's proof-of-stake, but it's not quite in full production yet.

As for the rich getting richer, that's no different from mining. Stakers have much lower ongoing costs, but the rewards are lower too so their percentage annual return isn't necessarily better. And everyone gets the same return so there's no economy of scale, which is not true of mining (or, for that matter, savings accounts).

Re: In defense of cryptocurrency

#77

Post by wmf »

yadaeno wrote: post #32

You forgot to mention: if you lose your keys, youre fucked. That is, of course unless you trust a centralized unregulated entity to manage them for you.

Wallet recovery is similar to reversing transactions: you can have it if you're willing to nominate some third party that you trust to manage it for you.

Re: In defense of cryptocurrency

#78

Post by wmf »

jolux wrote: post #53

The biggest problem I see with cryptocurrency is the transaction rate problem. It’s not like attempts haven’t already been made to solve it (Bitcoin Lightning), and Dr. Green fully admits that it’s not certain that any currently proposed changes can solve it either. How long is the world supposed to wait for reasonable transaction rates on this technology? If this is truly like the early internet, they should have va…

L1 transaction rate has improved from 7 TPS to over 1,000 TPS. If you didn't notice that's on you.

Re: In defense of cryptocurrency

#79

Post by kkielhofner »

bowsamic wrote: post #69
kkielhofner wrote: post #35

Earlier quoted context omitted.

The truth is they’re completely irrelevant to 99% of the internet population. Pick the top 20 coins. Look at their respective block explorers and check tx/day, unique address/day, etc. You’ll quickly come to the conclusion that maybe 100M people actually use cryptocurrencies in any meaningful way. The internet has 5B users. Cryptocurrency use is irrelevant. The cryptocurrency debate in technical circles reminds me of…

There are huge crypto.com ads plastered over every F1 track, I don't think this is extremely obscure stuff. I've encountered a lot of non tech people who own crypto. I saw some number somewhere that estimated that around 17% of Ukrainians own crypto, with similar numbers for other countries. The idea that it is an extremely obscure thing also seems like a function of being in a HN tech bubble. There are crypto ads an…

Owning crypto != actually using it.

Exchanges run private order books like any other investment org. People trading (gambling?) one ticker symbol (crypto or not) vs another (crypto or not) has absolutely nothing to do with real world use or utility. I can watch the Euro move up and down on forex and buy/sell to make money in my currency of choice while never touching a Euro, using it for anything, or having any real long term confidence, understanding, or belief in anything Euro or European related. I just know it made me X in USD this day/week/month and that's all I care about. Fill in EUR with BTC, ETH, etc. No one on exchanges cares about anything other than what it means for them in their local currency.

The use of exchanges is a get rich quick scheme not unlike penny stocks in the late 80s/early 90s or dot coms in the late 90s. In the late 90s very few in the general population jumping on dot com stocks had any idea what the hell any of it meant. They just heard a story about someone making $100k in a day and wanted in.

Look at the FOMO ads during the SuperBowl... There was zero value or utility demonstrated and 100% of the messaging was "everyone else is getting rich quick at crypto.com so don't miss out". Their fees (in real money) are absolutely bonkers so of course they're doing everything they can to bring people in.

Have you seen Wolf of Wall Street? There's a scene where the main character gets taken to lunch by an experienced broker. Long story short the lesson was this:

"Fuck the clients. Best case scenario let them think they're getting rich on paper while meanwhile we take home cold hard cash every time they trade via commission."

Be careful with surveys you "read somewhere"... The often cited "300 million crypto users worldwide" stat[0] (for example) comes from a blockchain payments company (surely they're unbiased, right?) that for some reason estimated this number from a Central Bank of Canada phone survey extrapolated to the worldwide population...

It's really interesting that whenever I bring up blockchain explorers and the fact that blockchain has the most transparent and reliable adoption metrics ever no one takes me up on an analysis of the data and deflects to virtually anything else instead.

Adoption and use data is there without bias. It requires some interpretation to determine something more akin to MAU/DAU but even very generous measure will show that 13 years after the launch of bitcoin blockchain is the most poorly adopted technology platform in recent history[1].

0 - https://triple-a.io/crypto-ownership/

1 - https://blog.cryptostars.is/blockchain-the-most-poorly-adopt...

Re: In defense of cryptocurrency

#80

Post by Banana699 »

agentultra wrote: post #72

There's nothing to defend. More ink has been spilled by some of the top experts in the field explaining that there is no use case for blockchain technology itself. It's old technology that has been around for a long time. There's nothing unique or special about it. It's interesting what the pro-regulation crypto-currency shills are advocating for. In the US a couple of pro-crypto senators proposed a bill that would i…

>It's old technology that has been around for a long time. There's nothing unique or special about it

I don't know how on earth can people be so confidently wrong, with almost religious fervor backing it up. It's not morally superior to be ignorant. Have you even read the post to the end ?

Blockchains do solve a well known problem in distributed systems in a novel way. The main novelty is PoW consensus, a probabilistic equivalent to an Atomic Broadcast algorithm [https://en.wikipedia.org/wiki/Atomic_broadcast] which ensures that a distributed network of computers all agree on the order of the same set of messages. The protocol uses bits and pieces of ideas that were invented in the 90s (Hash pointer data structures and the idea of PoW itself), but assembles them brilliantly into a novel whole that solves an extremly difficult and decades-old theoritical problem in way unheard of before.

You can talk to the moon and back about how it's enviromentally wasteful or doesn't scale or not a currency or an attractive tool for scammers or etc etc etc..., but if you're unwilling to even understand the raw, neutral techonology it is built on, well, here goes all credibility of all your other non-obvious claims.

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