Ethereum Is a Dark Forest

The traditional american school of thought on money is that

1) the optimal supply of money is externally determined by the needs of commerce for liquidity,

2) new money can be created to meet the needs of commerce through public loans secured by real property pledged as collateral without any fixed artificial limits on supply

3) money may be circulated with an expiration date to discourage long term hoarding,

4) general governments should retain the ability to suppress the private issuance of bank notes and regain public control of the circulating medium of exchange in order to emit unsecured notes to pay for defensive war expenditures in the event that it cannot obtain loans from private banks and it is existentially necessary to do so

So some of the ideals espoused by blockchain activists may clash a bit with that.

I won’t dare to speak for anyone but me, but personally the issue I have with blockchain is that is a solution looking for a problem.

If you’ve ever done any business (sales/purchasing), you’ll soon see that trust is not really a problem. Trust is only a problem in single-transaction deals (two entities trade once and expect to never trade again), which is pretty rare. Even in that weird case, branding and reputation are actually quite good ways of providing trust.

In fact I would go further and say that the only entities that are impervious to the “conventional” approach are governments, by virtue of being monopolies.

I’ve heard amazing tales of what blockchain should be able to do, but so far it looks like they’ve failed in everything they’ve set up to do.

Blockchain currency (I’ll generalize a bit) was supposed to be a store of value. They are so bad at this that they’ve become an investing bubble, and one of the assets with highest volatility out there.

I’m still waiting for useful demos of blockchain technology that aren’t contrived situations or just smoke and mirrors for startups to get funded.

> 1) Proof-of-work systems are pure, unadulterated energy waste (and an ecological disaster as long as we depend on fossil fuels). They cannot, ever, be allowed to become significant in the economy, lest our future will be building a Dyson sphere around the Sun just to power everyone's ability to pay for a hot dog on their way to work.

> 3) The main users of cryptocurrencies are (AFAIK) criminals and amateur financial speculators.

The problem is that to fix this, we need governments to wrap their heads around this.

Cryptocurrencies exist as a thing that allows people to engage in pseudonymous financial transactions over the internet. It's going to be really hard to put the genie back in the bottle. Particularly for black market transactions, because then you can't even ban the currency since they'll just ignore the ban on the currency at the same time as they're ignoring the ban on the product the currency is being used to pay for.

Which means that the best thing we could do is out-compete it using a more traditional financial system. When the existing KYC laws have already been voided by the use of cryptocurrency, just admit the loss, stop yielding a competitive advantage to the system which is destroying the environment, and let people have pseudonymous bank accounts and smart contracts and so on, in ordinary banks and based on the trust in ordinary banks and governments rather than the trust in proof of work.

That would destroy the utility of cryptocurrency, and it could be the only way to really do that.

Thank you for the thoughtful response. I'll preface with saying that I listed my points as a contributors to the source of feelings I have about the crypto space - they're observations subject to selection bias.

RE 1. I keep hearing this for years now; I'll believe in PoS when I see it actually working.

RE 2., I just tend to keep finding (or being approached with) really bad ones. Last time I got excited was with FileCoin, but that seems to be... not moving too fast at all. I'll look into the quadratic funding/voting thing; it looks interesting, but from the brief overview, it's not necessarily crypto-specific.

RE 3. That belief is what I consider naive - or just perhaps I strongly hope it's wrong, because of point 1.

RE 4. That's true. I just keep hitting the obviously scammy ones - but that's perhaps because I'm an outside observer. Honest people who are knee-deep in crypto are definitely able to separate the wheat from the chaff.

RE 5. I don't doubt your friends are thoughtful and have strong moral compasses. But in that last statement, I was talking about trading these currencies in general - which counts in scam coins, bullshit "crypto! AI!" startups, and various criminals using cryptocurrencies for illicit trade. I would think this point is self-evident - an unregulated space with features that give more utility to criminals than to law-abiding citizens will, by definition, attract disproportionately more of the former than the latter. Also, when I say "disproportionately more" I really mean it, it's not a code for "everyone is bad".

I think "wildly" is an overstatement - decentralised systems have a place in the world, but it's IMO more niche than what current supporters are expecting.

OTOH, in the long tail case where we see a revolution in monetary policy theory, early crypto adopters can stand to make ridiculous amounts of money.