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Why I’m Cryptophobic

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Re: Why I’m Cryptophobic

#361

Post by enaaem »

marcosdumay wrote: post #217
enaaem wrote: post #101

Earlier quoted context omitted.

Fiat is indeed based on trust. The trust that the government remain functioning. Fiat is a government backed claim on economic production. That’s not trivial, because the government is the sole arbiter and enforcer of property rights. Fiat determines what resources you can legally assign to you, according to the rules of the sole arbiter of property rights. The notion of property rights is only relevant with a centra…

Gold was based on trust. Trust that the next merchant you deal with will want it. The same was true for salt, and many more local kinds of money that existed. It's also the same trust you need for fiat money. This, and trust that your government won't create a huge lot of it in an instant (slow rates of money creation are fine). Turns out that governments have a lot of leverage to enforce the first, more relevant kin…

With Cryptos you need to trust that you can convert it to fiat. Crypto trust is still a reliant on fiat trust. Any business accepting crypto, even drug dealers, need to convert their cryptos to fiat, because they need to pay the bills, pay their mortgage in system reliant on government enforced property rights.

Re: Why I’m Cryptophobic

#362

Post by syzygyhack »

leijurv wrote: post #343
syzygyhack wrote: post #98

Earlier quoted context omitted.

> But the same irrevocability is now what makes me deeply concerned. Strange hang-up to have. Irrevocability is not a trait that is fundamental to blockchain applications. If the application is smart-contract based, irrevocability is a choice at the source code level. Just because one transaction in a block is irrevocable doesn't mean that another transaction in a future block can't undo whatever arbitrary state chan…

I've heard the metaphor that "writing your ledgers in pen instead of pencil doesn't make transactions irreversible" - meaning that in the same sense, actions on the blockchain could be coded to be irreversible. The difference is in the authority of who gets to reverse transactions. For example, Tether can freeze and generally arbitrarily control USDT token. USDT therefore isn't really a cryptocurrency, since now a ce…

It may undermine why you want to use USDT. I don't see why it would affect your desire to use DAI, for example.

The point is that you can have it any way you like it. There are no hard and fast rules like "irrevocability" as described above.

You can have a contract be not updateable, final, and verify its source code to know there are no malicious functions. Or you can have one that is updateable by its developer. Or one that is updateable by an elected authority. Or updateable by a DAO of the contract's users. There's no single way to do it or perfect solution.

Like most software development, it is the understanding of application requirements and selection of tradeoffs.

Re: Why I’m Cryptophobic

#363

Post by joebob42 »

benreesman wrote: post #205
dmoy wrote: post #187

Earlier quoted context omitted.

You completely ignored what GP said. The floor is different from what people will sell it to you for right now. AMZN may have a floor of $ASSETS / #SHARES (or something, I just made that up), but that doesn't mean anyone will sell it to you for that right now.

Anyone can invent quasi-financial terms to make grandiose claims. The beauty of the market is that loudmouths don’t participate in the market for long. I’ll sell an American-style options contract to someone who thinks BTC is going anywhere near there at Black-Scholes -75. And I’ll have no trouble financing it. You want the other side?

I don't think "is this where the price is going" really has anything to do with what gp was even saying.

Re: Why I’m Cryptophobic

#364

Post by rvense »

rzwitserloot wrote: post #113
rvense wrote: post #41

Earlier quoted context omitted.

As far as I can tell, money is so entirely based on trust that it might as well consist of it, trust in in some fuzzy combination of other people's continued rationality and things staying roughly the same. I accept 100 euro bills for my labour because I believe I'll continue to be able to trade them for food and shelter.

The central tenet is the underlying intrinsic value. There are many fungible concepts that operate on a valuation that seems like it is being bought and sold solely on the basis that others think it is valuable too. However, usually there's a seed of intrinsics, something fundamental whose value will always be there. For 'fiat currency', it's the fact that the state has a monopoly on violence and has decreed both [A]…

Well, in my country my taxes are deducted from my salary before I receive it, so the psychology of that is a bit different. But I think we agree, what I'm saying is fiat money is valuable because of the stability of the institutions that order our society/ies, and because there is an unspoken agreement that most of us want things to stay roughly as they are and believe that they will. If too many cracks appear there, people start acting very different.

As for Bitcoin, the original Bitcoin paper talks about replacing trust with code, and I just don't buy it. Sure, you can trust that Bitcoin aren't spent more than once and all that, the maths take care of that. But it fails to consider all the institutions that integrate the Bitcoin world with the rest of social/economical reality, and all that arises there like price volatility, transactions taking forever, exchanges getting hacked, and that Bitcoin-as-a-casino, excuse me, object of speculation, has a far bigger impact on its day-to-day than for e.g. the Euro. The paper doesn't consider that reality at all, but those things mean that 1000EUR worth of Bitcoin is a lot less useful than a stack of fifties.

Re: Why I’m Cryptophobic

#365

Post by douglaswlance »

mjburgess wrote: post #291
douglaswlance wrote: post #284

Earlier quoted context omitted.

Cryptocurrencies have inherent value. Would you say there is value in having the capability to transact with someone else? There is some value there, no matter how many alternatives and how little that value is. That value scales exponentially with the number of potential transactional partners because each additional partner gives all other partners a new potential transactional partner. So at scale, even if the val…

Well that's the total addressable market: all possible users of any currency. Likewise, that's the same market for any currency proposal -- including all the coins currently trading at 0 USD. Money's job is not to have inherent use-value, as then people would use it up. Its value is relational, it tracks the economic exchanges with actual inherent value. But not perfectly, since you can eg., have hyperinflation, etc.…

It's not all possible users. It's all actual users.

Facebook isn't valuable because anyone on Earth could use it. It is valuable because people do use it and its value has the network effects.

Coins trading at 0 USD have no users, thus their value is 0.

Money must have inherent value (at least the capability of being traded) for it to be money.

Re: Why I’m Cryptophobic

#366

Post by koonsolo »

anbende wrote: post #272
mathattack wrote: post #233

Earlier quoted context omitted.

I will play the devils advocate here. What if it’s value is more like a store of value (gold) rather than a currency. We can’t pay all of our bills in gold, but it’s a store of value you can buy in and out of. I don’t have a horse in the race, just trying to understand.

Right, except that gold has inherent value. Historically we thought it was pretty and made jewelry out of it. It’s important for a variety of technology products. It’s a value store because it is consistently valuable first. Bitcoin skips that step.

Gold has pretty big downsides as a store of value. It's heavy, hard to transport, ... .

The key to a cryptocurrency store can be memorized in your head. That means I can have 2mil in my head, with no other way to access it. I take it wherever I go, and can access it when there is internet. I can also send it to whoever I want, no limit.

This is literally a 1st. How high people value that, is not up to me alone. But you cannot deny that it has some value. And as long as it has some value, the above works. It basically bootstrapped itself. Claiming it has a value of 0 is very short sighted.

Re: Why I’m Cryptophobic

#367

Post by zeven7 »

jrm4 wrote: post #322
Night_Thastus wrote: post #279

Earlier quoted context omitted.

[deleted]

Honestly, that someone can be this confidently incorrect is really fascinating to me, both in theory and practice. Even setting aside the fact that you're wrong in practice (i.e. there are already far more efficient cryptocurrencies in existence today) it's just very weird that the sort of person who goes to a site like this will confidently say something that's roughly equivalent to "We've reached the maximum speed…

This sums up how I feel about so many crypto related comments on HN. Just look at this thread. It's full of people confidently presenting 100% false statements as facts. Several of the comments contain something like "I looked into crypto years ago and then I saw problem X and discarded it." My guess is remorse because they could have been "early" compounded with confirmation bias.

To anyone who spent a few hours, days, weeks looking into crypto a few years ago and thinks you have any idea what's been going on in research in the field since then you're sorely mistaken.

Re: Why I’m Cryptophobic

#368

Post by koonsolo »

cypress66 wrote: post #230
mjburgess wrote: post #4

There needs to be some basic economics here.. Money has value because of the value of the economic transactions in which its conducted. Government-backed currencies are forced to have value in the sense they force people to use it for their taxes. The US, additionally, forces the world to use it for oil trades. Value is in those economic transactions. A currency is just a "liquifying" of that value, to make it easier…

As much as I enjoy (and actually use) crypto, you touch a very important point. No current cryptocurrency that is even remotely decentralized, offers good throughput / scalability / tps. Bitcoin has Lightning and it's in my opinion fundamentally flawed in its UX. It hasn't picked up much adoption after many years for what it's worth. Ethereum has many L2 solutions in development but they are many years away from bein…

Nano uses what they call a "block lattice" which is based on DAG's. Seems to work both in theory and practice: 0 fees, sub-second transactions and can handle thousands of tps.

Re: Why I’m Cryptophobic

#369

Post by ETH_start »

tsimionescu wrote: post #310
ETH_start wrote: post #194

Earlier quoted context omitted.

>>Per your example, ok Apple Pay got cut off. Is the transit system going to support crypto? Will they be able to run their business and make that transition with regulators? That's the big question. But assuming for a moment that crypto can act as a substitute for traditional centralized payment systems, then it has significant advantages in some contexts over those systems.

> But assuming for a moment that crypto can act as a substitute for traditional centralized payment systems, then it has significant advantages in some contexts over those systems. Except that, fundamentally, distributed permission-less systems can't come close to the computational efficiency of centralized systems. So this is like "assuming perpetual motion machines existed, we could build a post-scarcity society" l…

I don't think that is established. Distributed and permissionless systems don't need to handle the overhead of access control. They do have the computational overhead of massive redundancy, but that can be significantly reduced with zk-(SNARK/STARK) cryptography that provides succinct zero-knowledge proofs of validity.

With zk-proofs, the redundancy of a blockchain can be significantly reduced without comprimising security. What redundancy remains provides the high process integrity that critical applications like financial transactions require.

Re: Why I’m Cryptophobic

#370

Post by zeven7 »

danans wrote: post #283
ntoskrnl wrote: post #25

Earlier quoted context omitted.

Who says BTC isn't used for payments? Many porn sites ONLY allow you to pay with crypto, including PornHub[1], and they're keeping the lights on somehow. It's being used by the Ukrainian military to pay their suppliers while the banking system is offline[2]. It's being used for remittances. I had to pay my rent with it once. Also VPNs, etc. There's far more global economic activity conducted in BTC than in gold. It a…

> It's being used by the Ukrainian military to pay their suppliers while the banking system is offline Ukraine's banking system is both online and functional: https://kyivindependent.com/hot-topic/ukraines-banking-mirac... Regarding donations to Ukraine, the total value of donations to Ukraine has been around $900M so far [1], of which only $7M has been in crypto (according to your WSJ article), so less than 1%. 1. h…

> only $7M has been in crypto

Vitalik alone donated $5M. https://fortune.com/2022/04/08/vitalik-buterin-ukraine-donat...

This page says $60M has been donated to one specific organization https://donate.thedigital.gov.ua/

Here's another one that says they've collected $9M https://unchain.fund/

I'm sure there are others.

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