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In defense of cryptocurrency

blog.cryptographyengineering.com

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Re: In defense of cryptocurrency

#101

Post by abirch »

j_walter wrote: post #95
kkielhofner wrote: post #86

Earlier quoted context omitted.

We all pay for the fees but IMO it's more than worth it considering all of the things I mentioned and more. The other fees they rake in (I'm assuming you mean interest) are from issuing unsecured loans. That's another topic entirely. Escrow is many thousands of years old and certainly exists in many forms in the financial system today. It's just that because of all of the other things I mentioned the average person u…

How about real estate transactions. What fees are the average buyer and seller having to pay along with how many third party people have worked themselves into the fold to get their piece of the action? Why would you need title insurance when the blockchain holds all the information? Why would sellers need to pay up to 6% to a realtor and buyers pay thousands in closing costs...because there is a disparity in access…

The blockchain ownership may be flawed, just like the current paper one. That's why you'd still need title insurance.

Sellers and buyers don't need agents right now. Thanks to Zillow, the price disparity is moot. I knew more than my past real estate agent when I purchased my current house (it was a corporate move or I wouldn't have used one.)

Wire transfers should be instant and irreversible, that's why scammers use them. Where have you seen one that takes 7 days?

Re: In defense of cryptocurrency

#102

Post by randomran01234 »

fanf2 wrote: post #96
photochemsyn wrote: post #68

> "The top credit-card merchant fee actually rose in the United States between 1991 and 2009, and this is a goddamn tragedy, since these fees are baked into the cost of most retail goods and thus born by the working poor (who pay them even if they use cash.) . . . Why are these IT-focused industries so consistently immune to the same technological improvements and cost reductions we see everywhere else?" The simplest…

The solution that has actually been implemented in Europe is to regulate the payment providers, so inter-bank transfers are effectively free and instant, and credit card fees are capped at 0.3% (i.e. 10x less than in the USA).

This solves inter-bank transfers in EU but does not mean payments going out of, or into, the EU are solved.

Crypto takes a different approach: a single protocol that is shared across all countries.

Re: In defense of cryptocurrency

#103

Post by randomran01234 »

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.

ZK Rollups are definitely “on a blockchain” and exist as any other smart contract application, like USDC. What they move off-chain is the computation and data storage of a transaction, but verified zk proofs result in the same security guarantees as any other contract on the underlying L1.

Re: In defense of cryptocurrency

#104

Post by randomran01234 »

matkoniecz wrote: post #8
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…

From article itself: > That’s why it recently cost $22 (!) to send a single token transaction on Ethereum So Ethereum has prices ranging from 3.5$ to 22$? Great. And vast, vast majority of my transactions would be costlier on Ethereum. I am rarely paying over 267$ in one transaction. 22$ per transactions would result in typical grocery shopping doubling in price. 3.5$ would be noticeable. Also, in bank transfers that…

This same article mentions L2s which aim to bring these fees down to reasonable levels.

L2 like zkSync and Optimism are already very cheap and can likely continue to get cheaper.

https://l2fees.info/

Re: In defense of cryptocurrency

#105

Post by randomran01234 »

JackC wrote: post #98

"transaction reversibility is not about the ledger, but rather about the transaction rules that a currency uses. A reversible currency requires that someone anoint this trusted party (or trusted parties) and that they use their powers to freeze/burn/transact currency in ways that are at odds with the recorded owners’ intentions. And indeed, this is a capability that many tokens now possess" I think this is arguing th…

And it is fine to build systems with trusted parties on top of a permissionless network. The article cites USDC which does this, it is one of many applications users can choose to transact with. Attempting to bake reversibility into the protocol would lead to a tightly permissioned system with only a few trusted authorities.

A loose analogy might be the internet, which aims to be a decentralized global protocol that we can then build centralized systems on top of.

Re: In defense of cryptocurrency

#106

Post by randomran01234 »

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…

Did you read the article? No?

Re: In defense of cryptocurrency

#107

Post by randomran01234 »

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?

The idea is that if you have more tokens, you will reap more reward in PoS. This is because you receive around 5% return on your stake, so if you set up multiple validators you will earn more per year.

Note that PoW works exactly like this too, except far worse due to economies of scale. Purchasing mining facilities in bulk will give you a much better deal than buying rigs as a home miner. Whereas in PoS, both the ultra-whale (1000 ETH) and mini-whale (32 ETH) are earning the same exact % return on their investment. The average user delegating in a staking pool is also earning fairly similar return to all validators (with some % of their return paid to validators for their services).

I do not think the claim that PoS is more centralizing or more “rich get richer” than PoW is necessarily true.

Re: In defense of cryptocurrency

#108

Post by jolux »

randomran01234 wrote: post #106
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…

Did you read the article? No?

I did. He lays out several possible solutions but notes that none are proven. That’s what I’m criticizing: I’ve seen these claims made before, and they were never proven.

Re: In defense of cryptocurrency

#109

Post by jolux »

wmf wrote: post #78
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.

The article says Ethereum’s tx rate is 20-30 per second, and Bitcoin’s is 7. That’s what I’m going off.

Re: In defense of cryptocurrency

#110

Post by lamontcg »

> In other words, transaction reversibility is not about the ledger, but rather about the transaction rules that a currency uses. A reversible currency requires that someone anoint this trusted party (or trusted parties) and that they use their powers to freeze/burn/transact currency in ways that are at odds with the recorded owners’ intentions.

once you have a trusted third party, though, you no longer need permissionless blockchains and PoW/PoS. that also eliminates the need to "mine" and the environmental concerns. of course it also eliminates the get-rich-quick schemes as well. you wind up with VISA running on top of a permissioned DLT.

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