Nothing particularly surprising here, but a good read. The lack of anything to show for in the blockchain sphere after 12 years except for Bitcoin itself (and even there it’s unclear to me whether that has proven itself, or is just hanging on fueled by money laundering and as support for the shitcoin investment fraud scene).
I agree with others that it seems barely on topic here. Certainly Stephen Diehl’s Haskell/Crypto criticism from a couple weeks back seemed far more relevant to the site, and that was moderated, presumably because it was deemed off-topic…
I think the problem is you’re not aware of the developments coming out of the crypto space. Saying that there’s nothing to show for is incorrect, in my opinion.
I come from a country that has experienced severe inflation and the consequences of incompetent politicians in control of the central bank. You bet I’m invested in the crypto space. You might be too sooner than you think.
Widespread adoption of a currency that can’t be controlled by any government solves this.
Bitcoin in theory solves this, but it’s not scalable, fees become expensive and the consensus algorithm based on PoW is subject to too much systemic risk in my opinion. Some people are concerned about the environmental harm that BTC mining may cause. Promising alternatives to Bitcoin exist that are much more scalable, clean and that seem fit for the purpose of p2p digital cash, however, these technologies need to be stress tested as they make fundamental changes to the traditional BTC protocol. In order to stress test them you need people to use them, but it’s so easy to create a new cryptocurrencies that now there are thousands of them. Many are scams. So legitimate projects need to compete for the trust and attention of people.
All this only pertains to those aiming at becoming p2p digital cash, which is my main area of interest, then you have smart contracts which are a whole other world. New developments are coming out all the time and it’s hard to keep up. Extremely interesting experiments and ideas get implemented all the time. You can rest assured that cryptocurrencies are here to stay. Buckle up!
Which brings us full circle: These “better” digital currencies have been touted for 5, 10 years. If these truly were a viable improvement, a successful bitcoin successor could be expected to have emerged, with all the effort that’s been going into the field. By now it seems reasonable to suspect that there’s nothing viable there, and the research busywork machine is just kept rolling (consciously or not) because of the investment fraud incentives.
There ar successful Bitcoin successors, see Monero and the like. Maybe not as successful as anyone would like, but it doesn’t stop them being viable replacements.
You can’t solve a social/political problems with technical solutions.
Incompetent politicians will just make cryptocurrencies illegal if the adoption is ever high. They will blame pedo-rings, money laundering, terrorism, drug dealers etc.
Technically competent people need to stop thinking the technological space exists in a separate plane from the rest of humanity.
I had a long answer to your question but my browser crashed. People will do what is best for them. Cryptocurrencies are not immoral and people around the world are starting to adopt them. If this continues and good results are shown, it’d be hard for a liberal (in the freedom, not political sense) government to forbid their use by people. There’s a good case to make that the USD’s time as a reserve currency is coming to an end. Something else will have to take its place.
There’s a good case to make that the USD’s time as a reserve currency is coming to an end.
This was said 10 years ago.
At the end of the day, no cryptocurrency is backed by 10 aircraft carriers, 1000s nukes and millions of people willing too die to keep it afloat.
If this continues and good results are shown, it’d be hard for a liberal (in the freedom, not political sense) government to forbid their use by people.
It would be very easy. Governments have banned private currency before i.e. liberty dollar. The ability to control the money supply is fundamental to a nation’s sovereignty.
Also note that nobody will use a currency that fluctuates in value by 10% daily seriously. That is simply not workable.
Things change my friend. The dynamics of central banking are structured so that politicians have an incentive to print money in order to make the constituency happy in the short-term, with dire consequences. To see how things have changed, just check this out: https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm.
Regarding cryptocurrency, 10 years ago all we had was a whitepaper and an initial implementation. Now you have a whole new asset class, a field full with people working on new projects and ideas. Give it more time.
At the end of the day, no cryptocurrency is backed by 10 aircraft carriers, 1000s nukes and millions of people willing too die to keep it afloat.
None of this matters when you have the central bank controlling that currency printing it without proper regard to monetary phenomena. If people see their money being devalued, they’ll start using something else. It’s as simple as that, even if you try to coerce them not to, they’ll do it. Take my word for this, because I’ve seen it many times.
It would be very easy. Governments have banned private currency before i.e. liberty dollar. The ability to control the money supply is fundamental to a nation’s sovereignty.
This is false. Nations were sovereign before central banks. The problem is that governments like to have power and they get tons of it through controlling the currency. This has to stop, and it’ll stop eventually.
Also note that nobody will use a currency that fluctuates in value by 10% daily seriously. That is simply not workable.
They will if the volatility is better than the impact of holding a devaluing currency is lessened. Also this problem will solve itself once it gains wider adoption. Volatility is caused by a small market cap. People still speculate on fiat money (forex) and even the USD can be subject to quick losses of value. Just look at the USD’s worth over this year, it’s going to shit.
A fair question is: could something apart from a blockchain-based solution work? Some kind of gold or its facsimile?
And out of curiosity: how ok are these crappy governments with their crappy central banks with the use of crypto cash? Is it widespread enough to matter to the government?
The EU has put in enough regulation to make it for traditional intents and purposes illegal, unless you do bureaucracy, when it becomes (by my understanding) more trustworthy when dealing on exchanges.
Sometimes bitcoin feels like the most overkill solution imaginable, especially now that the “fun” has been sucked out of it; you file it in your taxes or you’re a criminal.
A fair question is: could something apart from a blockchain-based solution work? Some kind of gold or its facsimile?
Well, we already used gold as currency before and then central banks were established, probably by a combination of reasonable arguments and force. Why go back to something we had before? Gold is not so easy to handle.
And out of curiosity: how ok are these crappy governments with their crappy central banks with the use of crypto cash? Is it widespread enough to matter to the government?
I invite you to discover your independence and your right as an individual to transact with your fellow men and women in whatever means you desire. If anyone tries to coerce you to do otherwise, fight back.
The EU has put in enough regulation to make it for traditional intents and purposes illegal, unless you do bureaucracy, when it becomes (by my understanding) more trustworthy when dealing on exchanges.
Regulation can change.
Sometimes bitcoin feels like the most overkill solution imaginable, especially now that the “fun” has been sucked out of it; you file it in your taxes or you’re a criminal.
BTC is a dinosaur. It’s the original cryptocurrency and much is owed to it. But I personally would like it to be less relevant and let new projects get tested in the world arena. Cryptocurrency is software. Software changes and evolves/
Companies that are using blockchain technology for their services aren’t always advertising it.
Even if you could question the use of blockchain in some projects, it doesn’t change the fact that, as in any other technology choices like nosql vs sql, some people pick blockchain for reasons that are legit or perceived to be.
“Companies picking blockchain” generally means someone gave a fat stack of cash to consultants who know what a merkle tree is. This is useful, but it’s not new or interesting in any way. Calling that “blockchain” is just riding the hype from public trustless cryptocurrencies, which are actually infamous for burning massive amounts of power to fuel extortion/ransomware, all kinds of fraud, and speculation.
Arguing that you don’t care about the right to privacy because you have nothing to hide is no different than saying you don’t care about free speech because you have nothing to say.
(Aside from the submission having absolutely 0 technological, historical or philosophical content) I wonder if the author has read the bitcoin white paper, because they say a lot of things that aren’t correct, like
They can make money disappear from your account. So he invented bitcoin.
Which isn’t really why Satoshi invented Bitcoin. “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” Satoshi invented Bitcoin as a trustless peer-to-peer electronic cash system, a use-case where a Blockchain is overwhelmingly the best choice. The article reeks of smugness:
OK, so with bitcoin, banks can’t just remove money from your account at their own discretion. But does this really happen?
Something that a) isn’t the primary goal of Bitcoin to solve; and b) Is something that literally happens all the time for all kinds of reasons. He also complains about Bitcoin’s pseudonymity, an intended feature of the system. The author also seems to lack the ability to Google for certain Blockchain technologies and alternatives, as the Montero Blockchain affords all the advantages of Bitcoin whilst also being completely private and anonymous.
“Blockchain” is often a scam because at the end of the day, it was designed to be the backend for a peer-to-peer electronic cash system and only really works along similar domains. But Bitcoin is sound as a pound
British pound vs USD in the last two years: https://www.xe.com/currencycharts/?from=GBP&to=USD&view=2Y Price range is basically 1.25 USD/GBP +/- 10% and never goes outside that range. I’d count four very sharp increases or declines of more than +/- 5%, two coinciding with the start of the pandemic.
Bitcoin vs USD in the last two years: https://www.xe.com/currencycharts/?from=XBT&to=USD&view=2Y Harder to summarize but the price varies by up to 4x between lowest and highest point. I’d count ten very sharp swings of more than +/- 5%, one coinciding with the start of the pandemic.
Conclusion: Bitcoin is NOT sound as a pound. This has been your daily instance of XKCD 386, I couldn’t help myself. Thank you. :D
The author may have minor details wrong, but the main point (it’s a solution looking for a problem) seems to stand.
For example, there’s no obvious reason why distributing “children’s aid packages” needed to use Bitcoin. The closest reason the article gives is, “In the past, that was a nightmare of bureaucracy, receipts and documentation.” But it’s not clear how BitCoin sidestepped those problems. Is it a fundamental feature of BlockChain, or is it just too new for the bureaucracy to deal with yet?
If the problem with aid money is “receipts and documentation”, then the problem being “solved” is not “how do we make this easier for the people in need” it’s “how do we make this easier for people in positions of power to skim off the top without a lot of work”.
It already is a solution to a problem, the problem it was designed for being a trustless peer-to-peer electronic cash system. Any other application is potentially applying the wrong solution. From the Bitcoin whitepaper, bitcoin.pdf:
Abstract. A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the mainbenefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they’ll generate the longest chain and outpace attackers. The network itself requires minimal structure. Messages are broadcast on a best effort basis, and nodes can leave and rejoin the network at will, accepting the longest proof-of-work chain as proof of what happened while they were gone.
It already is a solution to a problem, the problem it was designed for being a trustless peer-to-peer electronic cash system.
Okay, but that’s moving the goal posts. What was the advantage of “trustless peer to peer electronic cash” for benefit distribution? What part of the process was slowing it down that BitCoin avoids?
I’m not sure what you mean. Bitcoin nor Blockchain were designed to do other things like distributing things, it just happens that people want to apply the blockchain data structure to non-Bitcoin problems. Bitcoin is exclusively about being cash-like.
To be fair to the article author, solving the trusted third party problem (and for anyone encountering this phrase for the first time: do the rms thing of replacing “trusted” with “treacherous” here to save yourself a lot of confusion) is key to Bitcoin.
To be fair to anyone who actually knows what they are talking about, I agree with you that financial censorship is absolutely a thing and it hits the most vulnerable the hardest.
No, because you’re claiming something that has a history of wild fluctuations is “sound as a pound”, thereby comparing it to something that has a history of being stable.
Thus, I assume you are either joking, or you have some vested interest in people buying bitcoin.
OK, so with bitcoin, banks can’t just remove money from your account at their own discretion. But does this really happen?
It happened to me, and when it happens it really leaves you with a weird feeling.
So this is how it happened to me: I have a few different bank accounts. It was the end of the tax season and I made the payment for my income tax. The trouble was - for some reason the payment wasn’t registered with the tax inspection institution (maybe because I made the transfer from my other account, who knows, but it happened). So the next day after the deadline, I go to do some shopping and at the cashier - I cannot pay. Not enough funds. I go back home - and my balance is negative. Any money I put into the account is immediately sent to cover the taxes (which I already paid from a different bank).
I had to write a complaint in order to sort this out, and it succeeded, I got everything back after a few days when they traced the payment I made from that different bank. But it is a very unpleasant experience. The bank allowed some institution to access my bank account and even charge it below zero, with no warning. And all because of an error on their part.
I can only imagine what the people who acquire fines that they cannot pay have to go through.
I had to write a complaint in order to sort this out, and it succeeded, I got everything back after a few days when they traced the payment I made from that different bank.
ok sure but if that was all on a blockchain, the erroneous transactions could not have been reversed. I guess I’m not really sure why this counts as a spooky story about non-blockchain systems.
Blockchains don’t allow “pull” transactions, only “push” ones. Also in the parent’s story, the transaction was presumably “reversed” by the entity issuing a refund.
First - I am not really defending blockchain things from criticism. Also not trying to spook non-blockchain systems. Simply providing one counterpoint to one argument that author made. In my experience banks can take money from your account and even give access to third party (mostly government) agencies to do what they wish.
Second - in my case the transaction was not erroneous. It was correct, except the tax agency didn’t count it in. I think mainly because I sent it from a different bank account than the one I entered in their system. So really there was nothing to reverse.
Third - I do think that blockchain, as a technology, has (or had) the potential to provide financial transaction services for the little guy, out of reach of banks, corporations, and big government. Wether or not that is still feasible I have no idea, since I never owned any bitcoin or really any other crypto currency.
The problem with articles like his is….. it’s like saying God doesn’t exist. Well, well done. Happy discussing for the next 1k years.
If you are not into economics nor finance, you won’t understand the appeal for Bitcoin. After just 12 years, US banks can store cryptocurrencies now. So Hedge Funds will soon move into the market and buy Bitcoin for their clients. So I would call this a pretty big success. A currency with no country or company behind has a fair share of an investment portfolio of big names like Paul Tudor Jones
The argument is pointless. You don’t need Docker to live, you don’t need an iPhone, you need nothing. Everything technological solves a problem created by itself a few years ago.
Does Blockchain solve a problem yet? Well it is used and tested. We will see. People sometimes don’t understand that it doesn’t matter if it’s more complicated then just using a database. It’s not a technological problem but a business and politics problem. People are using SalesForce for stuff which can be solved easier. But it you know, the business world cares about different things. So if Blockchain can bring more than 5 companies together to share data and make them public, here you go. Even if it’s 10times more complicated than a simple database.
I don’t understand the hatred against Blockchain or Bitcoin at all. If you don’t like it, don’t use it. People trade cryptocurrencies, the gamble, they believe Bitcoin has long lasting value, so be it. Tesla is up a ridiculous amount this year. It’s a religion so far and not value. Maybe comment on it without making any prediction or talking it down or up.
It’s a bit sad, since their other articles are mostly well researched and written, and after reading this piece, I read a few others and subscribed for a year. Great website, I hope they don’t follow blindly into the Blockchain-Hating-Cult like everyone else but try to report on it more nuanced.
I don’t understand the hatred against Blockchain or Bitcoin at all. If you don’t like it, don’t use it. People trade cryptocurrencies, the gamble, they believe Bitcoin has long lasting value, so be it.
This is a really frustrating comment because what you’re basically saying is that you don’t understand that your actions affect other people. It’s gross that you would describe cryptocurrencies as gambling as a means of portraying them as neutral, and therefore unworthy of criticism. The idea that people shouldn’t be bothered by gambling because if they don’t like to gamble they can just not gamble is ignoring the fact that people who are brought to financial ruin by gambling have other people in their lives, and those people are affected. Multiple people in my family have been brought to financial ruin by gambling addiction. Do you really think that doesn’t affect the people around them?
I know people that have sunk the majority of their wealth into cryptocurrencies. Friends and family. I’m not the one taking the risks, but I know that if the bubble bursts, those people, people I care about, will need help. That is why I’m bothered by the breathless and seemingly unending parade of empty promises from crypto people.
If you are not into economics nor finance, you won’t understand the appeal for Bitcoin.
honestly so frustrated by this comment too. Every person I know that actually works in finance thinks Bitcoin is ridiculously risky and not stable enough to be a primary investment vehicle for most people. The people I know who are into Bitcoin largely have no interest in finance outside of Bitcoin; they’re nearly all programmers with essentially no financial acumen outside of cryptocurrencies, and no non-crypto investment portfolio. If you have a diversified portfolio and some of your assets are in cryptocurrencies, fine, whatever; that’s a measured risk. But I don’t know a single person like that. Everyone I know with a diversified portolio has no crypto at all, and everyone I know with substantial crypto holdings has essentially no portfolio outside of crypto and some recreational trading on Robinhood.
It seems like you are having a problem with your family and friends. In my surrounding, I’m the only one involved. While crypto is a significant part of my worth at the moment, it’s a result of crypto going up, not me investing any serious money. And I’m diversifying.
they’re nearly all programmers
It seems that they are investing into things they might understand, at least from technical side of things. IMHO beats investing into some stock.
That is why I’m bothered by the breathless and seemingly unending parade of empty promises from crypto people.
How is crypto different from startups in that regard? Is the main difference is lack of barrier between “investors” and “enterprises”, no accredited investor institution?
An interesting fact is that many HFT companies are going after the cryptocurrencies. These companies are all about volatility and making a lot of trades, not keeping anything. One can extrapolate that cryptocurrencies are nothing about safe investment to keep, but more of a vehicle to get payout through volatility. And I would posit that it’s why they are kept afloat for so long – because companies can gamble easily and reap profits.
I think you let your emotions affect a lot of your insights. Which is fine when you talk about your friends and family. But in investing, there is no place for that.
So lets say people “sunk all their money into Bitcoin”. What does it mean? Bitcoin, based on the charts, is mainly in the greens. So you accumulated along the years, you are probably in the greens, by a lot.
I invested since 2016, here and there, and I am maybe overall 32% YTY in plus. My other bets in companies and some ETFs are around 7 - 15% in plus. So what gives? Everything you do in investing is betting and managing your risks. What you meant to say is people didn’t learn to manage their risks. If Bitcoin falls below your number you need to sell to still take a profit, sell. All good. Nothing crashed. The stock market went down as much as Bitcoin in March, and Bitcoin went up much more than the stock market overall since then.
I know a ton of people where Bitcoin was the entry drug to their financial education. As everyone will tell you, you might loose money in the beginning because you know, you are learning. You pay tuition at school, and you pay a bit when first investing. But so many people took it as a chance to understand the broader financial system. If more people would actually know and read about it, they would be baffled by the amount of bullshit there is going on and therefore get into the space and make it better.
Owning your own money is a valid reason to own Bitcoin. Warren Buffet doesn’t like Gold, as many. But nobody goes Bananas over it. You have to build a bigger macro narrative for yourself and every day check if you think the market/world is on course and follows your narrative or not. If not, change something.
So what does it mean to have 100% in Bitcoin? Nothing really. If you bought in at 5k and Bitcoin crashes down to 6k and you sell, you still made a profit. As with literally everyhting else. This is “how you trade stocks” (at least the baseline of it), and this is how people use Bitcoin.
I don’t see why you think you are so much smarter than the people around you. That’s the difference between taking a bet (lets say Go will have sufficient market share so I should learn it to get a job, or Bitcoin will outperform other major assets in the next 5 years), and then see if it’s true or not and adjust accordingly. That’s all.
So why not just educate yourself. And help other people educate themselves too.
Now are there scammers around? Hell yes. 99% of the market is complete bollocks. But as with every invention, be it the car, cargo containers etc., you had the crazy ones believing in it. Cargo container didn’t made any sense financially in the beginning, until the surroundings changed.
Central banks will create their own digital currencies (well they already have but it’s used for high street banks) but they will release versions of it for the general public. Lots of banks are going bust in the next few years. Learning and investing into the future is as valid as moving from mainframe to servers (mainframes still run more efficiently in banks then Linux servers, but who cares right?).
This is a really frustrating comment because what you’re basically saying is that you don’t understand that your actions affect other people. It’s gross that you would describe cryptocurrencies as gambling as a means of portraying them as neutral, and therefore unworthy of criticism. The idea that people shouldn’t be bothered by gambling because if they don’t like to gamble they can just not gamble is ignoring the fact that people who are brought to financial ruin by gambling have other people in their lives, and those people are affected. Multiple people in my family have been brought to financial ruin by gambling addiction. Do you really think that doesn’t affect the people around them?
Let’s ignore cryptocurrency for the time being - this is a fully-general argument against any kind of human behavior with some kind of risk involved, that a person might foolishly take. It’s not wrong to found a company that offers hang-gliding lessons just because hang-gliding is a relatively high risk activity that people have gotten themselves killed doing in the past. It’s not wrong to operate a craft brewery just because some people are prone to alcoholism.
honestly so frustrated by this comment too. Every person I know that actually works in finance thinks Bitcoin is ridiculously risky and not stable enough to be a primary investment vehicle for most people. The people I know who are into Bitcoin largely have no interest in finance outside of Bitcoin; they’re nearly all programmers with essentially no financial acumen outside of cryptocurrencies, and no non-crypto investment portfolio. If you have a diversified portfolio and some of your assets are in cryptocurrencies, fine, whatever; that’s a measured risk. But I don’t know a single person like that. Everyone I know with a diversified portolio has no crypto at all, and everyone I know with substantial crypto holdings has essentially no portfolio outside of crypto and some recreational trading on Robinhood.
Bitcoin is absolutely not stable enough to be a primary investment vehicle for most people and may never be. This is also true of gold, but that doesn’t mean that the existence of gold is bad. I’m broadly in favor of cryptocurrencies and own some bitcoin and monero myself, and I absolutely have a non-crypto investment portfolio diversified according to my best understanding of the principles of sound portfolio management for small-scale investors. I don’t even think of the small amount cryptocurrency I do own as “part of my investment portfolio”, since I do acutally use it to pay for things I need from time to time. This is a problem with a set of people you know not having the financial acumen to make prudent investment decisions, not the existence of bitcoin.
Innumerable technologies. Apple devices. Windows devices. Game consoles. Programming languages. The internet itself.
And without any deep knowledge nor balanced.
I have deep structural knowledge of the crypto space, and I completely agree with most critical perspectives, including that it’s fundamentally a solution chasing a problem. Does the fact that my opinion is informed make it different, somehow, than if it were less informed?
That’s a philosphical question, but yea, I think it does.
I don’t disagree with the main statement of the article. But st no-matter which MeetUp I went, people actually working in this space were the biggest critics. So they are very well aware.
And looking for a solution, isn’t Bitcoin the biggest, mind blowing success? Like really, creating a hedge against the world reserve currency out of the blue? It’s bigger than the success of Wikipedia in my opinon, and maybe just short after Linux.
And looking for a solution, isn’t Bitcoin the biggest, mind blowing success? Like really, creating a hedge against the world reserve currency out of the blue?
I don’t consider it successful in any meaningful sense. (I also don’t consider it a currency, by any meaningful definition of currency, and I certainly don’t see it as a hedge against “the world reserve”.) So to say it’s more successful than Wikipedia is totally incoherent to me. But that’s the thing: success doesn’t have a single, objective definition. That’s fine.
I’ve been following Bitcoin/blockchain since the white paper was released and the linked article is a model of clarity. I especially like the capsule explanation of the consensus protocol.
Whoever flagged this comment as a troll is pretty clearly abusing (or totally ignorant about the intent of) the flagging system. If you’re reading this comment, please do your research and remove the flag. If a mod reads this comment, please investigate this user.
I can see many many use cases where a third party is expensive and not required by law, and where parties want a distributed record of things that has strong guarantees on non-repudiation and verifications.
Many use cases are simply dumb, but that doesn’t mean the core ideas is dumb and useless.
It’s easy to get nerd-sniped by the cleverness of the solution to a seemingly-impossible problem of a truly trustless ledger, but lots of real-world problems don’t really require that. As soon as you can place a little bit of trust in some party, everything becomes much much simpler.
And as the article mentions, blockchain’s lack of trust and centralization is more of a theoretical property than a practical one. In practice the blockchain is a database managed by a few people with the cheapest electricity. In the end it all holds together due to economic incentives.
Are you referring to “printing money” (in quotes because I don’t think there’s much actual printing going on) decreasing the real value of a dollar / unit of currency?
How did this article even make it in here? It’s mainly targeted at non-technical people, and in my opinion, leaves a bit to be desired. The problem with good blockchain applications is not that they don’t exist, but that idiots tried to sell us crap and succeeded. I still believe that blockchain s particularly interesting in cases where the individuals need to ensure that no single party can meddle with the individual transactions. I can’t think of a better example than voting, but somehow, no one tries to target that.
Nothing particularly surprising here, but a good read. The lack of anything to show for in the blockchain sphere after 12 years except for Bitcoin itself (and even there it’s unclear to me whether that has proven itself, or is just hanging on fueled by money laundering and as support for the shitcoin investment fraud scene).
I agree with others that it seems barely on topic here. Certainly Stephen Diehl’s Haskell/Crypto criticism from a couple weeks back seemed far more relevant to the site, and that was moderated, presumably because it was deemed off-topic…
I think the problem is you’re not aware of the developments coming out of the crypto space. Saying that there’s nothing to show for is incorrect, in my opinion.
The original article makes that point pretty convincingly; you might want read it and argue against that, instead.
(Are you invested in the crypto space by any chance?)
I come from a country that has experienced severe inflation and the consequences of incompetent politicians in control of the central bank. You bet I’m invested in the crypto space. You might be too sooner than you think.
So what developments in the crypto-space has solved this problem? (Referring your original post)
Widespread adoption of a currency that can’t be controlled by any government solves this.
Bitcoin in theory solves this, but it’s not scalable, fees become expensive and the consensus algorithm based on PoW is subject to too much systemic risk in my opinion. Some people are concerned about the environmental harm that BTC mining may cause. Promising alternatives to Bitcoin exist that are much more scalable, clean and that seem fit for the purpose of p2p digital cash, however, these technologies need to be stress tested as they make fundamental changes to the traditional BTC protocol. In order to stress test them you need people to use them, but it’s so easy to create a new cryptocurrencies that now there are thousands of them. Many are scams. So legitimate projects need to compete for the trust and attention of people.
All this only pertains to those aiming at becoming p2p digital cash, which is my main area of interest, then you have smart contracts which are a whole other world. New developments are coming out all the time and it’s hard to keep up. Extremely interesting experiments and ideas get implemented all the time. You can rest assured that cryptocurrencies are here to stay. Buckle up!
Which brings us full circle: These “better” digital currencies have been touted for 5, 10 years. If these truly were a viable improvement, a successful bitcoin successor could be expected to have emerged, with all the effort that’s been going into the field. By now it seems reasonable to suspect that there’s nothing viable there, and the research busywork machine is just kept rolling (consciously or not) because of the investment fraud incentives.
There ar successful Bitcoin successors, see Monero and the like. Maybe not as successful as anyone would like, but it doesn’t stop them being viable replacements.
Well, we’ll see how things pan out.
You can’t solve a social/political problems with technical solutions.
Incompetent politicians will just make cryptocurrencies illegal if the adoption is ever high. They will blame pedo-rings, money laundering, terrorism, drug dealers etc.
Technically competent people need to stop thinking the technological space exists in a separate plane from the rest of humanity.
Only because something is made illegal it doesn’t mean that people will comply.
If this is your solution, then why even have crypto-currency? Just don’t comply with the central bank’s monopoly on the money supply.
In most places it hasn’t gotten bad enough yet for the opportunity costs to be too high not to use them.
So the people are not willing to not comply now but they will start not complying once the crypto new world order is implemented?
I had a long answer to your question but my browser crashed. People will do what is best for them. Cryptocurrencies are not immoral and people around the world are starting to adopt them. If this continues and good results are shown, it’d be hard for a liberal (in the freedom, not political sense) government to forbid their use by people. There’s a good case to make that the USD’s time as a reserve currency is coming to an end. Something else will have to take its place.
I recommend you watch this very short video: https://youtu.be/1tHO3cylCRM
This was said 10 years ago.
At the end of the day, no cryptocurrency is backed by 10 aircraft carriers, 1000s nukes and millions of people willing too die to keep it afloat.
It would be very easy. Governments have banned private currency before i.e. liberty dollar. The ability to control the money supply is fundamental to a nation’s sovereignty.
Also note that nobody will use a currency that fluctuates in value by 10% daily seriously. That is simply not workable.
Things change my friend. The dynamics of central banking are structured so that politicians have an incentive to print money in order to make the constituency happy in the short-term, with dire consequences. To see how things have changed, just check this out: https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm.
Regarding cryptocurrency, 10 years ago all we had was a whitepaper and an initial implementation. Now you have a whole new asset class, a field full with people working on new projects and ideas. Give it more time.
None of this matters when you have the central bank controlling that currency printing it without proper regard to monetary phenomena. If people see their money being devalued, they’ll start using something else. It’s as simple as that, even if you try to coerce them not to, they’ll do it. Take my word for this, because I’ve seen it many times.
This is false. Nations were sovereign before central banks. The problem is that governments like to have power and they get tons of it through controlling the currency. This has to stop, and it’ll stop eventually.
They will if the volatility is better than the impact of holding a devaluing currency is lessened. Also this problem will solve itself once it gains wider adoption. Volatility is caused by a small market cap. People still speculate on fiat money (forex) and even the USD can be subject to quick losses of value. Just look at the USD’s worth over this year, it’s going to shit.
With all due respect, cryptocurrencies are not exactly well known for their stability.
An unregulated currency used mostly by speculators and subject to price manipulation is not what I regard as a suitable replacement for fiat.
Well, we’ll see how things pan out.
https://data.bloomberglp.com/professional/sites/10/Bloomberg-Indices-Outlook_Cryptos_August-2020.pdf
A fair question is: could something apart from a blockchain-based solution work? Some kind of gold or its facsimile?
And out of curiosity: how ok are these crappy governments with their crappy central banks with the use of crypto cash? Is it widespread enough to matter to the government?
The EU has put in enough regulation to make it for traditional intents and purposes illegal, unless you do bureaucracy, when it becomes (by my understanding) more trustworthy when dealing on exchanges.
Sometimes bitcoin feels like the most overkill solution imaginable, especially now that the “fun” has been sucked out of it; you file it in your taxes or you’re a criminal.
Well, we already used gold as currency before and then central banks were established, probably by a combination of reasonable arguments and force. Why go back to something we had before? Gold is not so easy to handle.
I invite you to discover your independence and your right as an individual to transact with your fellow men and women in whatever means you desire. If anyone tries to coerce you to do otherwise, fight back.
Regulation can change.
BTC is a dinosaur. It’s the original cryptocurrency and much is owed to it. But I personally would like it to be less relevant and let new projects get tested in the world arena. Cryptocurrency is software. Software changes and evolves/
Companies that are using blockchain technology for their services aren’t always advertising it. Even if you could question the use of blockchain in some projects, it doesn’t change the fact that, as in any other technology choices like nosql vs sql, some people pick blockchain for reasons that are legit or perceived to be.
“Companies picking blockchain” generally means someone gave a fat stack of cash to consultants who know what a merkle tree is. This is useful, but it’s not new or interesting in any way. Calling that “blockchain” is just riding the hype from public trustless cryptocurrencies, which are actually infamous for burning massive amounts of power to fuel extortion/ransomware, all kinds of fraud, and speculation.
Do you hold any fiat currency investments, savings or pensions?
Might that bias you against crypto mayhaps?
;-)
The classic Nick Weaver talk is still the best general criticism.
Arguing that you don’t care about the right to privacy because you have nothing to hide is no different than saying you don’t care about free speech because you have nothing to say.
(Aside from the submission having absolutely 0 technological, historical or philosophical content) I wonder if the author has read the bitcoin white paper, because they say a lot of things that aren’t correct, like
Which isn’t really why Satoshi invented Bitcoin. “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” Satoshi invented Bitcoin as a trustless peer-to-peer electronic cash system, a use-case where a Blockchain is overwhelmingly the best choice. The article reeks of smugness:
Something that a) isn’t the primary goal of Bitcoin to solve; and b) Is something that literally happens all the time for all kinds of reasons. He also complains about Bitcoin’s pseudonymity, an intended feature of the system. The author also seems to lack the ability to Google for certain Blockchain technologies and alternatives, as the Montero Blockchain affords all the advantages of Bitcoin whilst also being completely private and anonymous.
“Blockchain” is often a scam because at the end of the day, it was designed to be the backend for a peer-to-peer electronic cash system and only really works along similar domains. But Bitcoin is sound as a pound
Warning, pedantry ahead!
British pound vs USD in the last two years: https://www.xe.com/currencycharts/?from=GBP&to=USD&view=2Y Price range is basically 1.25 USD/GBP +/- 10% and never goes outside that range. I’d count four very sharp increases or declines of more than +/- 5%, two coinciding with the start of the pandemic.
Bitcoin vs USD in the last two years: https://www.xe.com/currencycharts/?from=XBT&to=USD&view=2Y Harder to summarize but the price varies by up to 4x between lowest and highest point. I’d count ten very sharp swings of more than +/- 5%, one coinciding with the start of the pandemic.
Conclusion: Bitcoin is NOT sound as a pound. This has been your daily instance of XKCD 386, I couldn’t help myself. Thank you. :D
Lol. Sound as a DollarPound, then.
The author may have minor details wrong, but the main point (it’s a solution looking for a problem) seems to stand.
For example, there’s no obvious reason why distributing “children’s aid packages” needed to use Bitcoin. The closest reason the article gives is, “In the past, that was a nightmare of bureaucracy, receipts and documentation.” But it’s not clear how BitCoin sidestepped those problems. Is it a fundamental feature of BlockChain, or is it just too new for the bureaucracy to deal with yet?
If the problem with aid money is “receipts and documentation”, then the problem being “solved” is not “how do we make this easier for the people in need” it’s “how do we make this easier for people in positions of power to skim off the top without a lot of work”.
It already is a solution to a problem, the problem it was designed for being a trustless peer-to-peer electronic cash system. Any other application is potentially applying the wrong solution. From the Bitcoin whitepaper, bitcoin.pdf:
Okay, but that’s moving the goal posts. What was the advantage of “trustless peer to peer electronic cash” for benefit distribution? What part of the process was slowing it down that BitCoin avoids?
I’m not sure what you mean. Bitcoin nor Blockchain were designed to do other things like distributing things, it just happens that people want to apply the blockchain data structure to non-Bitcoin problems. Bitcoin is exclusively about being cash-like.
To be fair to the article author, solving the trusted third party problem (and for anyone encountering this phrase for the first time: do the rms thing of replacing “trusted” with “treacherous” here to save yourself a lot of confusion) is key to Bitcoin.
To be fair to anyone who actually knows what they are talking about, I agree with you that financial censorship is absolutely a thing and it hits the most vulnerable the hardest.
That (and your further comments below) sure sounds like run-of-the-mill crypto coin shilling…
How is this the top reply?
I don’t own any Bitcoin or Monero.
You sound like either a comedian, or a really bad financial advisor getting a kickback from a bitcoin exchange.
Why, because I have a different opinion on the quality of the design of the Bitcoin protocol?
No, because you’re claiming something that has a history of wild fluctuations is “sound as a pound”, thereby comparing it to something that has a history of being stable.
Thus, I assume you are either joking, or you have some vested interest in people buying bitcoin.
“Sound as a pound” in the UK just means solid, reliable etc. I’m not talking about the value of Bitcoins, but the protocol itself.
And neither of those terms applies to something that is highly volatile.
Oh right, that thing that has even less use than actual bitcoins?
Are you intentionally misunderstanding what I’m saying? (Also, Bitcoin is the protocol.)
Also for extortion. It has especially fueled the ransomware explosion.
It happened to me, and when it happens it really leaves you with a weird feeling.
So this is how it happened to me: I have a few different bank accounts. It was the end of the tax season and I made the payment for my income tax. The trouble was - for some reason the payment wasn’t registered with the tax inspection institution (maybe because I made the transfer from my other account, who knows, but it happened). So the next day after the deadline, I go to do some shopping and at the cashier - I cannot pay. Not enough funds. I go back home - and my balance is negative. Any money I put into the account is immediately sent to cover the taxes (which I already paid from a different bank).
I had to write a complaint in order to sort this out, and it succeeded, I got everything back after a few days when they traced the payment I made from that different bank. But it is a very unpleasant experience. The bank allowed some institution to access my bank account and even charge it below zero, with no warning. And all because of an error on their part.
I can only imagine what the people who acquire fines that they cannot pay have to go through.
ok sure but if that was all on a blockchain, the erroneous transactions could not have been reversed. I guess I’m not really sure why this counts as a spooky story about non-blockchain systems.
Blockchains don’t allow “pull” transactions, only “push” ones. Also in the parent’s story, the transaction was presumably “reversed” by the entity issuing a refund.
Maybe I made some things unclear.
First - I am not really defending blockchain things from criticism. Also not trying to spook non-blockchain systems. Simply providing one counterpoint to one argument that author made. In my experience banks can take money from your account and even give access to third party (mostly government) agencies to do what they wish.
Second - in my case the transaction was not erroneous. It was correct, except the tax agency didn’t count it in. I think mainly because I sent it from a different bank account than the one I entered in their system. So really there was nothing to reverse.
Third - I do think that blockchain, as a technology, has (or had) the potential to provide financial transaction services for the little guy, out of reach of banks, corporations, and big government. Wether or not that is still feasible I have no idea, since I never owned any bitcoin or really any other crypto currency.
The problem with articles like his is….. it’s like saying God doesn’t exist. Well, well done. Happy discussing for the next 1k years.
If you are not into economics nor finance, you won’t understand the appeal for Bitcoin. After just 12 years, US banks can store cryptocurrencies now. So Hedge Funds will soon move into the market and buy Bitcoin for their clients. So I would call this a pretty big success. A currency with no country or company behind has a fair share of an investment portfolio of big names like Paul Tudor Jones
The argument is pointless. You don’t need Docker to live, you don’t need an iPhone, you need nothing. Everything technological solves a problem created by itself a few years ago.
Does Blockchain solve a problem yet? Well it is used and tested. We will see. People sometimes don’t understand that it doesn’t matter if it’s more complicated then just using a database. It’s not a technological problem but a business and politics problem. People are using SalesForce for stuff which can be solved easier. But it you know, the business world cares about different things. So if Blockchain can bring more than 5 companies together to share data and make them public, here you go. Even if it’s 10times more complicated than a simple database.
I don’t understand the hatred against Blockchain or Bitcoin at all. If you don’t like it, don’t use it. People trade cryptocurrencies, the gamble, they believe Bitcoin has long lasting value, so be it. Tesla is up a ridiculous amount this year. It’s a religion so far and not value. Maybe comment on it without making any prediction or talking it down or up.
It’s a bit sad, since their other articles are mostly well researched and written, and after reading this piece, I read a few others and subscribed for a year. Great website, I hope they don’t follow blindly into the Blockchain-Hating-Cult like everyone else but try to report on it more nuanced.
This is a really frustrating comment because what you’re basically saying is that you don’t understand that your actions affect other people. It’s gross that you would describe cryptocurrencies as gambling as a means of portraying them as neutral, and therefore unworthy of criticism. The idea that people shouldn’t be bothered by gambling because if they don’t like to gamble they can just not gamble is ignoring the fact that people who are brought to financial ruin by gambling have other people in their lives, and those people are affected. Multiple people in my family have been brought to financial ruin by gambling addiction. Do you really think that doesn’t affect the people around them?
I know people that have sunk the majority of their wealth into cryptocurrencies. Friends and family. I’m not the one taking the risks, but I know that if the bubble bursts, those people, people I care about, will need help. That is why I’m bothered by the breathless and seemingly unending parade of empty promises from crypto people.
honestly so frustrated by this comment too. Every person I know that actually works in finance thinks Bitcoin is ridiculously risky and not stable enough to be a primary investment vehicle for most people. The people I know who are into Bitcoin largely have no interest in finance outside of Bitcoin; they’re nearly all programmers with essentially no financial acumen outside of cryptocurrencies, and no non-crypto investment portfolio. If you have a diversified portfolio and some of your assets are in cryptocurrencies, fine, whatever; that’s a measured risk. But I don’t know a single person like that. Everyone I know with a diversified portolio has no crypto at all, and everyone I know with substantial crypto holdings has essentially no portfolio outside of crypto and some recreational trading on Robinhood.
It seems like you are having a problem with your family and friends. In my surrounding, I’m the only one involved. While crypto is a significant part of my worth at the moment, it’s a result of crypto going up, not me investing any serious money. And I’m diversifying.
It seems that they are investing into things they might understand, at least from technical side of things. IMHO beats investing into some stock.
How is crypto different from startups in that regard? Is the main difference is lack of barrier between “investors” and “enterprises”, no accredited investor institution?
An interesting fact is that many HFT companies are going after the cryptocurrencies. These companies are all about volatility and making a lot of trades, not keeping anything. One can extrapolate that cryptocurrencies are nothing about safe investment to keep, but more of a vehicle to get payout through volatility. And I would posit that it’s why they are kept afloat for so long – because companies can gamble easily and reap profits.
This reminds me of this ancient HN comment:
https://news.ycombinator.com/item?id=3787375
I think you let your emotions affect a lot of your insights. Which is fine when you talk about your friends and family. But in investing, there is no place for that.
So lets say people “sunk all their money into Bitcoin”. What does it mean? Bitcoin, based on the charts, is mainly in the greens. So you accumulated along the years, you are probably in the greens, by a lot.
I invested since 2016, here and there, and I am maybe overall 32% YTY in plus. My other bets in companies and some ETFs are around 7 - 15% in plus. So what gives? Everything you do in investing is betting and managing your risks. What you meant to say is people didn’t learn to manage their risks. If Bitcoin falls below your number you need to sell to still take a profit, sell. All good. Nothing crashed. The stock market went down as much as Bitcoin in March, and Bitcoin went up much more than the stock market overall since then.
I know a ton of people where Bitcoin was the entry drug to their financial education. As everyone will tell you, you might loose money in the beginning because you know, you are learning. You pay tuition at school, and you pay a bit when first investing. But so many people took it as a chance to understand the broader financial system. If more people would actually know and read about it, they would be baffled by the amount of bullshit there is going on and therefore get into the space and make it better.
Owning your own money is a valid reason to own Bitcoin. Warren Buffet doesn’t like Gold, as many. But nobody goes Bananas over it. You have to build a bigger macro narrative for yourself and every day check if you think the market/world is on course and follows your narrative or not. If not, change something.
So what does it mean to have 100% in Bitcoin? Nothing really. If you bought in at 5k and Bitcoin crashes down to 6k and you sell, you still made a profit. As with literally everyhting else. This is “how you trade stocks” (at least the baseline of it), and this is how people use Bitcoin.
I don’t see why you think you are so much smarter than the people around you. That’s the difference between taking a bet (lets say Go will have sufficient market share so I should learn it to get a job, or Bitcoin will outperform other major assets in the next 5 years), and then see if it’s true or not and adjust accordingly. That’s all.
So why not just educate yourself. And help other people educate themselves too.
Now are there scammers around? Hell yes. 99% of the market is complete bollocks. But as with every invention, be it the car, cargo containers etc., you had the crazy ones believing in it. Cargo container didn’t made any sense financially in the beginning, until the surroundings changed.
Central banks will create their own digital currencies (well they already have but it’s used for high street banks) but they will release versions of it for the general public. Lots of banks are going bust in the next few years. Learning and investing into the future is as valid as moving from mainframe to servers (mainframes still run more efficiently in banks then Linux servers, but who cares right?).
Let’s ignore cryptocurrency for the time being - this is a fully-general argument against any kind of human behavior with some kind of risk involved, that a person might foolishly take. It’s not wrong to found a company that offers hang-gliding lessons just because hang-gliding is a relatively high risk activity that people have gotten themselves killed doing in the past. It’s not wrong to operate a craft brewery just because some people are prone to alcoholism.
Bitcoin is absolutely not stable enough to be a primary investment vehicle for most people and may never be. This is also true of gold, but that doesn’t mean that the existence of gold is bad. I’m broadly in favor of cryptocurrencies and own some bitcoin and monero myself, and I absolutely have a non-crypto investment portfolio diversified according to my best understanding of the principles of sound portfolio management for small-scale investors. I don’t even think of the small amount cryptocurrency I do own as “part of my investment portfolio”, since I do acutally use it to pay for things I need from time to time. This is a problem with a set of people you know not having the financial acumen to make prudent investment decisions, not the existence of bitcoin.
When does a critical opinion of something turn into hate? When does a broadly critical consensus about something turn into a cult?
When was a technology ever portraied like that? Like there are reports on non-tech websites out there. And without any deep knowledge nor balanced.
People loose their goddamn minds about it, it is ridiculous. So I would say it gives clicks, and it’s part of a movement.
It’s the same as the pro-Blockchain no-matter-what cult.
Innumerable technologies. Apple devices. Windows devices. Game consoles. Programming languages. The internet itself.
I have deep structural knowledge of the crypto space, and I completely agree with most critical perspectives, including that it’s fundamentally a solution chasing a problem. Does the fact that my opinion is informed make it different, somehow, than if it were less informed?
That’s a philosphical question, but yea, I think it does.
I don’t disagree with the main statement of the article. But st no-matter which MeetUp I went, people actually working in this space were the biggest critics. So they are very well aware.
And looking for a solution, isn’t Bitcoin the biggest, mind blowing success? Like really, creating a hedge against the world reserve currency out of the blue? It’s bigger than the success of Wikipedia in my opinon, and maybe just short after Linux.
I don’t consider it successful in any meaningful sense. (I also don’t consider it a currency, by any meaningful definition of currency, and I certainly don’t see it as a hedge against “the world reserve”.) So to say it’s more successful than Wikipedia is totally incoherent to me. But that’s the thing: success doesn’t have a single, objective definition. That’s fine.
When was a technology so heavily peddled by snake-oil salesmen who see it as a get-rich-quick scheme?
I totally agree. But why just counter-attack? Why not actually report, show facts and let the reader decide. Or actually inform the reader.
I’ve been following Bitcoin/blockchain since the white paper was released and the linked article is a model of clarity. I especially like the capsule explanation of the consensus protocol.
Whoever flagged this comment as a troll is pretty clearly abusing (or totally ignorant about the intent of) the flagging system. If you’re reading this comment, please do your research and remove the flag. If a mod reads this comment, please investigate this user.
I can see many many use cases where a third party is expensive and not required by law, and where parties want a distributed record of things that has strong guarantees on non-repudiation and verifications.
Many use cases are simply dumb, but that doesn’t mean the core ideas is dumb and useless.
That’s the “almost nothing” part of the article.
It’s easy to get nerd-sniped by the cleverness of the solution to a seemingly-impossible problem of a truly trustless ledger, but lots of real-world problems don’t really require that. As soon as you can place a little bit of trust in some party, everything becomes much much simpler.
And as the article mentions, blockchain’s lack of trust and centralization is more of a theoretical property than a practical one. In practice the blockchain is a database managed by a few people with the cheapest electricity. In the end it all holds together due to economic incentives.
“I have never heard of a bank simply taking money from someone’s account.”
You might know it better as the money printer going brrr.
Are you referring to “printing money” (in quotes because I don’t think there’s much actual printing going on) decreasing the real value of a dollar / unit of currency?
Way to completely misunderstand decentralization. Good job.
How did this article even make it in here? It’s mainly targeted at non-technical people, and in my opinion, leaves a bit to be desired. The problem with good blockchain applications is not that they don’t exist, but that idiots tried to sell us crap and succeeded. I still believe that blockchain s particularly interesting in cases where the individuals need to ensure that no single party can meddle with the individual transactions. I can’t think of a better example than voting, but somehow, no one tries to target that.