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In defense of cryptocurrency

blog.cryptographyengineering.com

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Re: In defense of cryptocurrency

#121

Post by adra »

dxhdr wrote: post #12
PaulHoule wrote: post #2

If you think Mastercard and Visa fees are too high, fees are higher on Bitcoin. It's like the way Amway victims will try to sell you an $8 tube of toothpaste, "draw circles" to show that 7 people get a cut from that tube of toothpaste and then say "How does Amway bring you great prices on quality products?" (tap whiteboard) "By eliminating the middleman!"

> If you think Mastercard and Visa fees are too high, fees are higher on Bitcoin. Mastercard and Visa charge a percentage (?!), Bitcoin is a fixed amount per transaction. Plus Bitcoin won't deny your ability to make a transaction.

American express may be the best damn card that's not accepted anywhere I transact my business so in the end it doesn't matter how good American express is. It's a piece of plastic for the good it does me. Same with all crypto. Even if I was invested fully, there's still approaching zero of the number of purchases that I make that would ever be viable using crypto. The gold standard answers in this chat about big purchases are even more egregious. The ability for big money exchange without recourse spells disaster. The ability for big purchases which could be cheaper on crypto platforms also subjects that stored value to huge value shifts daily. Maybe in countries that are even more screwed up than crypto volatility there may be some sort of hedge assuming leaders don't lock you up for using them.

Re: In defense of cryptocurrency

#122

Post by thawaya3113 »

randomran01234 wrote: post #102
fanf2 wrote: post #96

Earlier quoted context omitted.

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.

How is crypto any better at doing this than say, Western Union?

Ultimately, as someone who finds blockchain technology really cool, what I struggle with is, in which scenarios is blockchain better than Postgres?

Re: In defense of cryptocurrency

#123

Post by throw_nbvc1234 »

doliveira wrote: post #42
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.

Yeah, and if you lose your private key apparently you deserve to lose everything.

In the same way as someone keeping their savings in cash under their mattress deserves to lose everything or in a different way?

Re: In defense of cryptocurrency

#124

Post by pcthrowaway »

randomran01234 wrote: post #107
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 ul…

Your stake is really growing relative to the total supply as fast as a smaller holder's though. Like anything, rich have more opportunities to get richer, but I don't think these problems are specifically egregious in PoS. For chains which have on-chain governance, there's also the possibility that large holders will vote to change distribution in ways that favor them (though this hasn't happened yet), but this is a problem with any vote-by-stake system (imagine if equity share-holders could vote for larger shareholders to get more dividends).

And there are theoretical solutions to this as well; projects like Bright-ID are working on proof-of-identity / proof-of-humanity.. maybe we'll see a proof-of-stake blockchain with governance tied to identity in the future? This could even be combined with zero-knowledge to ensure voters are unique humans without making their walletidentity associations publicly discoverable (though there may be situations where this is desireable as well)

Re: In defense of cryptocurrency

#125

Post by toolz »

kelseyfrog wrote: post #63

This is a genuine question. Is there a defense of cryptocurrencies that doesn't follow the pattern of, "yes, that is indeed true, however here is an edge case or counterexample which either doesn't exist yet, or is not in wide use so it's not actually a problem"? Every article or comment defending cryptocurrencies has followed this pattern and it isn't convincing to me. I'd love to have my mind changed, but when ever…

which argument do you find to be an "edge case"? My main argument in favor of crypto is the democratization of finance and leveling the playing field, which as we can already see crypto generally only has real benefits to the poor - for rich it's just a speculative play, but for the poor it can mean the difference between getting paid across borders without corruption stealing your money or being able to save wealth when banks won't help you out of lock you out.

Re: In defense of cryptocurrency

#127

Post by dcolkitt »

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…

Many real world systems are "nearly trustless". Of course you still need some sort of court system if someone decides to break bad. But in the 99%+ of times you're in the happy path, economic transactions occur based on autonomous rules encoded in software.

The analogy I like to use is what's harder to buy a $1 million house or $1 million of Microsoft stock? The former process takes weeks, and dozens of man hours from lawyers, realtors, escrow agents, bankers, county property registrars, etc. Whereas a buy order to execute Microsoft shares happens in microseconds. That's because we've built a highly streamlined autonomous system for executing stock transactions. Yes of course, there's a trusted layer built on courts and fiat law at the bottom. And occasionally for a corner case, real lawyers have to get involved. But the vast majority of the time, this layer is completely abstracted away and trading stocks are just bits flipped on a computer.

When somebody says something like "let's put houses on the blockchain", the idea isn't to get rid of the fiat law system completely. At the end of the day, you still need courts and sheriffs to enforce property rights. But the idea is that we can wrap the house in an LLC, whose bylaws state that it's governed by on-chain contracts. (Which Delaware Chancery courts will absolutely recognize and enforce.)

Now instead of directly transacting at the very low-tech county property registrar we can transact using an on-chain NFT that grants the equivalent of ownership rights to the house. (This is very analogous to how Cede & Co technically owns almost all the stock shares in America, and holds them under your name for you.)

That NFT is way more powerful and efficient to transact with than the county property record. It lives on a credibly neutral level that already has billions in native capital and liquidity and exposes a fully Turing complete smart contract system. You can sell your house atomically and instantly to anyone in the world with no lawyers or escrow agents. You can pledge it as collateral and borrow against it. You can fractionalize it and sell a portion. Or roll it into a larger portfolio and slice into tranches. All with no more than few dozen lines of code. Without blockchains all of those operations would take hundreds of pages of legal documents and weeks of back and forth.

Re: In defense of cryptocurrency

#128

Post by forum_ghost »

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.

Bitcoin solves the problem of frozen fx reserves and seized assets. It's a neutral store of value.

the TAM is 400+ trillion.

Payments are low margin, low value business. Often even subsidized by the systemic banks.

Do you really think it costs zero to secure the entire GDP, and the entire wealth, of an entire economy? zero cost SEPA transactions don't secure the EU economy. The US military and their nuclear weapons do, and they don't cost zero, like a SEPA transactions for a coffee.

What's the cost to secure 10 trillion? 100 trillion?

Re: In defense of cryptocurrency

#129

Post by petmon »

j_walter wrote: post #4
PaulHoule wrote: post #2

If you think Mastercard and Visa fees are too high, fees are higher on Bitcoin. It's like the way Amway victims will try to sell you an $8 tube of toothpaste, "draw circles" to show that 7 people get a cut from that tube of toothpaste and then say "How does Amway bring you great prices on quality products?" (tap whiteboard) "By eliminating the middleman!"

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…

The cost of a bitcoin transaction is not adequately captured by transaction fees. There's two alternative ways to look at it:

1. Divide miner revenue (fees + seignorage) by the number of transactions, yielding the total amount that miners extract. It was $34m today, with ~261k transactions, yielding a cost per transaction of $130. [1]

2. Estimate energy cost at 1,173 kWh per transaction [2]. If you assume cheap electricity at say $.09/kWh you get a cost of $105 per transaction in electricity alone, which ignores hardware capital costs, etc.

Either way the cost is over $100 per transaction, and would be reflected in a falling value of BTC. But it may be masked if there's an influx of new money into the system.

1: https://ycharts.com/indicators/bitcoin_miners_revenue_per_da...

2: https://fortune.com/2021/10/26/bitcoin-electricity-consumpti...

Re: In defense of cryptocurrency

#130

Post by Ologn »

> it argues that the entire technology field is worthless and cannot be used for any practical purpose

Which I concur with. Cryptocoins are worthless, the idea Bitcoin has a market cap of $5-6 hundred billion is absurd, and maybe the increasing fed funds rate etc. will pop this speculative bubble more than it already has (Bitcoin had the even more absurd market cap of $1 trillion toward the end of last year).

Why is a Bitcoin worth anything? I know why my M1 Mac is worth something, I know why a box of raisins is worth something, I know why a bar of gold is worth something. I see no worth in a Bitcoin. I ask why it has any worth and the bag holders cast around looking for an equivalent, and only seem to find that dollars have been unmoored from value for half a century and the response is it's like the dollar (of course the dollar is implicitly, not explicitly like before 1971, backed by tens of thousands of tons of bullion gold among other things, but that's another tangent...)

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