Why I have zero faith in crypto venture capitalists • Hacker News Board

Re: Why I have zero faith in crypto venture capitalists

#231

Post by sanderjd » Mon, Jun 14, 2021, 4:21 PM UTC

lottin wrote: post #227

sanderjd wrote: post #216

Earlier quoted context omitted.

It can if it is written into the contract. I suspect pretty much all contracts will have provisions for this in the future.

No, a smart contract cannot seize assets from another wallet. A key feature of distributed ledgers is that only the person who has the private key to a wallet can move assets from that wallet. If you don't understand this there's no point continuing this conversation.

I think you are thinking too narrowly. It is true that a simple transfer from one wallet to another can't be reversed through technical means (though I'm interested in seeing how the law on this develops, for instance whether the legal system will compel wallet owners to pay back assets under threat of real-world non-crypto consequences if they don't), but you certainly can set up an escrow system where the keys to the escrow account are held by a "court" which can come to consensus on one participant retrieving funds from another participant under some set of rules and circumstances. This is more complex and fraught to get right than just direct wallet transfers, which I'm sure is why it isn't common (or maybe doesn't exist at all, I'm not sure), but it's also not impossible.

Re: Why I have zero faith in crypto venture capitalists

#232

Post by lottin » Mon, Jun 14, 2021, 4:52 PM UTC

sanderjd wrote: post #231

lottin wrote: post #227

Earlier quoted context omitted.

No, a smart contract cannot seize assets from another wallet. A key feature of distributed ledgers is that only the person who has the private key to a wallet can move assets from that wallet. If you don't understand this there's no point continuing this conversation.

I think you are thinking too narrowly. It is true that a simple transfer from one wallet to another can't be reversed through technical means (though I'm interested in seeing how the law on this develops, for instance whether the legal system will compel wallet owners to pay back assets under threat of real-world non-crypto consequences if they don't), but you certainly can set up an escrow system where the keys to t…

Sure, but that's not a smart contract, it's a "court system" (except much worse, because it's unaccountable), whereas the whole purpose of smart contracts was to replace courts. The other problem is the assets still need be deposited somewhere in advance, which defeats the purpose of a whole lot of financial operations including most types of loans.

Re: Why I have zero faith in crypto venture capitalists

#233

Post by mmcnl » Mon, Jun 14, 2021, 5:23 PM UTC

wyck wrote: post #42

steveBK123 wrote: post #19

I find crypto super interesting and have dipped my toes in with some small real money just to force myself to try out different products. That said, so far, almost 10 years in, there really are not a lot of real world use cases. Sure there are glorified POCs of things that could potentially lead in the direction of real world use cases. But most of these products/tokens are just extremely meta. Tokens you get paid/pa…

This opinion is really common, I used to have it but what changed my mind was realizing there are not really any "real world" use cases. I look at crypto as actual money, with the same definition: "money is a verifiable record that is generally accepted". Money in of itself does not have any "real world" use cases, money is money. Money facilitates economic velocity and growth in the same way crypto does, except cryp…

> Money facilitates economic velocity and growth in the same way crypto does, except crypto has the potential to be more efficient and secure.

Does crypto do that? I highly doubt that. Real-world economies based on crypto are none existent, or so small they are insignificant. I feel like what you are saying is a huge simplification and may not be true at all.

Re: Why I have zero faith in crypto venture capitalists

#234

Post by mmcnl » Mon, Jun 14, 2021, 5:25 PM UTC

asdev wrote: post #67

steveBK123 wrote: post #19

I find crypto super interesting and have dipped my toes in with some small real money just to force myself to try out different products. That said, so far, almost 10 years in, there really are not a lot of real world use cases. Sure there are glorified POCs of things that could potentially lead in the direction of real world use cases. But most of these products/tokens are just extremely meta. Tokens you get paid/pa…

this was also the case with the internet. the world wide web was just an experiment for a long time. applications and their base layers take time to develop. can't rule it out yet. tokens and shitcoins as get rich quick schemes are detracting from the true innovation imo

Not true at all. It almost immediately took off and transformed economies within a decade. The same can't be said for crypto. Crypto is older than the internet was _after_ the dotcom bubble.

Re: Why I have zero faith in crypto venture capitalists

#235

Post by sedachv » Mon, Jun 14, 2021, 6:59 PM UTC

hanklazard wrote: post #221

sedachv wrote: post #177

Earlier quoted context omitted.

> A friend who works in real estate foreclosures told me that everyone he works with is using stable coins now for this very reason. How exactly does that work? Have trustees started accepting stablecoins for deposits? Are there auctions where you can pay with stablecoins? Or is it just for payments from foreclosure buyers to their representatives who make bids on the buyers' behalf?

I believe they were just using it as a method to prove available funds while waiting on the traditional banks / lawyers to do their thing. The more interesting part to me was that he said it was guys in their late 50's / early 60's with backgrounds in construction learning how to use crypto for these foreclosure auctions.

> I believe they were just using it as a method to prove available funds while waiting on the traditional banks / lawyers to do their thing.

That sounds really vague. A proof of funds letter has nothing to do with money transfers. You can walk into a bank branch and get a signed proof of funds letter right there. The people actually selling the property that require a proof of funds letter are going to be either a trustee or court auction (foreclosure), or when making an offer to a bank for an REO/bank-owned property (what some people mistakenly call foreclosures).

It would be really interesting if those parties started accepting stablecoin signed messages as proof of funds letters, but I do not know of any that do. The real interesting part in that scenario would have nothing to do with cryptocurrencies - it would mean the widespread acceptance of public key cryptography for legal and financial documents and transactions. Once that happens there would be even less reason for the really shitty distributed database part of cryptocurrencies anymore. Not a popular opinion, but one I have held for a long time, and if you think the system through it is hard not to arrive at the same conclusion. "You mean this all could be done with PGP in the 1990s?"

What it sounds like is happening is that third-party companies involved in foreclosure buying are accepting stablecoin signed messages to act as financing intermediaries. That really does not mean a lot - there are even financing companies out there specializing in supplying "instant" proof of funds letters to house flippers that are really conditional loan offers.

Re: Why I have zero faith in crypto venture capitalists

#236

Post by sanderjd » Mon, Jun 14, 2021, 7:46 PM UTC

lottin wrote: post #232

sanderjd wrote: post #231

Earlier quoted context omitted.

I think you are thinking too narrowly. It is true that a simple transfer from one wallet to another can't be reversed through technical means (though I'm interested in seeing how the law on this develops, for instance whether the legal system will compel wallet owners to pay back assets under threat of real-world non-crypto consequences if they don't), but you certainly can set up an escrow system where the keys to t…

Sure, but that's not a smart contract, it's a "court system" (except much worse, because it's unaccountable), whereas the whole purpose of smart contracts was to replace courts. The other problem is the assets still need be deposited somewhere in advance, which defeats the purpose of a whole lot of financial operations including most types of loans.

I'm talking about implementing a "court" inside a smart contract. That is, the "court" is just one or more entities that control the private keys necessary to govern the funds locked in the contract.

I'm not sure I understand your last sentence, escrow is a common mechanism in traditional finance, which seems to work for financial operations including loans. But you may well be right on this point, I just don't really understand what you mean.

Re: Why I have zero faith in crypto venture capitalists

#237

Post by wyck » Mon, Jun 14, 2021, 9:22 PM UTC

crazygringo wrote: post #71

wyck wrote: post #42

Earlier quoted context omitted.

This opinion is really common, I used to have it but what changed my mind was realizing there are not really any "real world" use cases. I look at crypto as actual money, with the same definition: "money is a verifiable record that is generally accepted". Money in of itself does not have any "real world" use cases, money is money. Money facilitates economic velocity and growth in the same way crypto does, except cryp…

> except crypto has the potential to be more efficient and secure Except that's not clear at all. It's currently less efficient than electronic bank ledgers by many orders of magnitude, in any way you measure -- energy consumption, cost, speed, etc. And it's paradoxically less secure, as tons of successful hacks/thefts have proven. If my bank gets hacked, I'm still FDIC-insured. The courts will make me whole. Crypto…

> Except that's not clear at all.

Well it is when you realize the main feature of crypto is a decentralized bank and not a centralized one. A concept which makes it truly revolutionary in the time scale of humans using banks, but also very challenging as a technology.

The speed and security is constantly being worked on, there are other protocols like Solana which has a peak of 65k transactions per second.

Crypto is still a baby, saying it's slow short sighted to say the least.

Re: Why I have zero faith in crypto venture capitalists

#238

Post by lottin » Mon, Jun 14, 2021, 9:22 PM UTC

sanderjd wrote: post #236

lottin wrote: post #232

Earlier quoted context omitted.

Sure, but that's not a smart contract, it's a "court system" (except much worse, because it's unaccountable), whereas the whole purpose of smart contracts was to replace courts. The other problem is the assets still need be deposited somewhere in advance, which defeats the purpose of a whole lot of financial operations including most types of loans.

I'm talking about implementing a "court" inside a smart contract. That is, the "court" is just one or more entities that control the private keys necessary to govern the funds locked in the contract. I'm not sure I understand your last sentence, escrow is a common mechanism in traditional finance, which seems to work for financial operations including loans. But you may well be right on this point, I just don't reall…

Well, there are different types of loans. What you're describing is a collateralised loan which is the only type of loan that is feasible to implement with smart contract. Such a loan isn't very useful because the borrower has to post a sum equivalent to the amount borrowed as collateral, which means the borrower isn't really borrowing anything. Undercollateralised loans are more useful, because they can be used to actually finance projects, but these loans can only work if the lender has the ability to seize the lender's assets in the event of default, otherwise the lender would take the money and never pay the loan back. Such loans are not possible with cryptocurrencies because cryptocurrencies are "unconfiscatable", they cannot be seized. The escrow mechanism that you mention doesn't work because because it requires the lender to post collateral and then it's no longer an undercollateralised loan.

Re: Why I have zero faith in crypto venture capitalists

#239

Post by egypturnash » Mon, Jun 14, 2021, 10:48 PM UTC

sintaxi wrote: post #110

egypturnash wrote: post #57

Earlier quoted context omitted.

“Pay-to-win” is generally not considered to be a recipe for fun games, as far as I know. Having a sudden flood of rich assholes coming in and crushing people because all the best guns are a trivial real-money purchase for them sounds like a good way to kill a game.

People value cosmetics and will pay through the teeth to have the only gun that shoots blue fireballs instead of orange - especially if said gun was introduced to the public through a partnership with Ninja or PewDiePie.

Oh yeah, I know. The person I was responding to was talking about "buying an army" to smash other people's bases, though.

Re: Why I have zero faith in crypto venture capitalists

#240

Post by sanderjd » Tue, Jun 15, 2021, 2:47 AM UTC

lottin wrote: post #238

sanderjd wrote: post #236

Earlier quoted context omitted.

I'm talking about implementing a "court" inside a smart contract. That is, the "court" is just one or more entities that control the private keys necessary to govern the funds locked in the contract. I'm not sure I understand your last sentence, escrow is a common mechanism in traditional finance, which seems to work for financial operations including loans. But you may well be right on this point, I just don't reall…

Well, there are different types of loans. What you're describing is a collateralised loan which is the only type of loan that is feasible to implement with smart contract. Such a loan isn't very useful because the borrower has to post a sum equivalent to the amount borrowed as collateral, which means the borrower isn't really borrowing anything. Undercollateralised loans are more useful, because they can be used to a…

Ah I see the miscommunication, I wasn't really talking about loans but just more like settlements between parties which can use escrow. I definitely see your point about most loans being unimplementable purely as smart contracts. I guess I'm not quite as convinced as you that there can't be a useful role for smart contracts as one portion of a system that also includes legal contracts and traditional liability. It seems to me that it's harder to take out and especially to underwrite loans than it needs to be and I think there's some room for improvement there, though I'm certainly not completely convinced that this will come to fruition.

Thanks for your patience in making me see what you meant!