This is some of the worst junk writing I've seen on the hill. Some pretty wrong things in here, like insinuating that the only value of crypto is to criminals, and all but saying that the reason there are hackings to things like critical infrastructure is because crypto exists, which is just silly. Then it flags bitcoin as an environmental hazard, though estimates seem to be ~50-70% of BTC energy use is from renewables. I would label that as a bad faith argument because there isn't really a standardized basis of measuring things by energy consumption (what's the energy consumption to mine for gold? Create plastics? Etc.). All of this coupled with support for a government cryptocurrency? By a person who says they don't understand crypto or its value prop in the first sentence. That probably means they should go learn more before having an opinion...
For people not in this world, cryptocurrency does NOT mean digital money. It needs to be rebranding. It's a wave of projects building (mostly) decentralized tools or things secured by a blockchain secured through some protocol, such as finance exchanges, art minting and exchanging for digital scarcity, video games, real world supply chain tracking, music creation + tracking (hard to determine who is in every song and what sampling they used to pay artists), general contract writing with built in logic to be able to have trust in an interaction without having to involve a third party. There are many more examples, but it's more apt to call it Web 3.0 than cryptocurrency at this point.
> though estimates seem to be ~50-70% of BTC energy use is from renewables
Bullshit. When one coal mine in a remote region of China flooded, the Bitcoin hash rate measurably dropped by 30%. Keep in mind this was just one coal mine. Not all of China's production.
> it's more apt to call it Web 3.0 than cryptocurrency at this point.
I've said this so many times: But what does it doooooo??? Name one project that isn't "speculation" or "loans" built on cryptocurrency that has seen any uptick or utility. NFTs sure ain't it. DAOs sure ain't it. Supply chain tracking sure ain't it.
I haven't seen one work. Don't say it's the early internet and we'll find one eventually, because it's been 12 years since Bitcoin's launch in 2009, and the ideas are all still junk. Widespread broadband to the home was in strong demand in the early 90s, and Amazon was already selling books while dwellings with connectivity were in the single-digit numbers. The 80s saw university lines saturated by BBSes, newsgroups and MUDs. There was far more demand than supply, and it was very immediately clear what the utility was.
Crypto democratizes and decentralizes finance, banking the unbanked, debanking the overbanked, and rebanking the debanked. Using lightning network crypto eliminates middlemen and the annoying experience of transacting money between businesses and customers. With brain wallet seeds you can take your wealth with you anywhere as long as you can remember it or write it down where nobody else will see it, ever. For maximum security you can send your funds to a burner address, withdrawing them from circulation and ensuring nobody can ever steal them.
I know you said no loans, but I can't skip mentioning DeFi which enables anybody to borrow their own money from themselves, anytime, fully electronically and without centralization.
Then you have smart contracts, which are like a computer, but on everybody's computer at the same time. You can write full programs with complexity nearing that of FizzBuzz and run them worldwide for only hundreds of dollars.
Just imagine a world without crypto. It would be like a world without hackysack, or a world without mail order swords on the shopping channel. Unrecognizable and primitive.
The credit markets being built on top of crypto have been useful to me personally. Rather than going through the lengthy and invasive credit application/approval processes required by lenders, I can take out a cash loan against my crypto in 1 day with zero hassle. Early last year (prior to building my crypto position) I shut down my startup and had no cash to rely on. I ended up burning through credit while looking for work. It was very stressful. If I'd had the options I do now then I would have taken out a balloon loan against my crypto and taken more time to search for my next gig, rather than jumping on the first decent position I was offered because I needed the money. It has really opened a new world for me financially. I rest much easier knowing that I have this tool available.
>Bullshit. When one coal mine in a remote region of China flooded, the Bitcoin hash rate measurably dropped by 30%. Keep in mind this was just one coal mine. Not all of China's production.
FYI, China kicked out crypto miners, which is why hash rates tanked in the last few months:
So we don't know what percentage of mining is even left in China.
Also, dirty energy is a regulatory issue. Externalities should be captured in the price with taxation, and coal mining should not be subsidized by a nation state. When you do those things, energy consumers won't want to use dirty energy, they'll flock to renewables.
> I've said this so many times: But what does it doooooo???
Are you asking about Bitcoin or Crypto? Bitcoin doesn't do much atm, but Ethereum does stuff, and Bitcoin Cash is pretty practical as a currency at the moment. There's plenty that can be done, but the market will have to decide what to converge on.
Just because it doesn't serve a clear purpose doesn't mean it should be banned.
If governments simply allowed cryptocurrencies to exist outside of any regulation except the obligation to pay taxes on transactions and gains, eventually participation would decline as users of the currencies lost their money to scams or mismanagement, in the absence of a state interest in
protecting participants.
If the system is designed to resist state intervention, maybe letting it run as designed, and suffer the consequences, is the best approach. There's no need to regulate it out of existence just because it serves no apparent purpose. This is one case where the market will sort that out if we let it.
> I've said this so many times: But what does it doooooo???
It does exactly what it set out to do in the first sentence of the original white paper.
"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."[0]
> I've said this so many times: But what does it doooooo??? Name one project that isn't "speculation" or "loans" built on cryptocurrency that has seen any uptick or utility. NFTs sure ain't it. DAOs sure ain't it. Supply chain tracking sure ain't it.
In developing nations where the residents do not have access to regulated and "safe" investment vehicles like stock exchanges, where can they invest their saves? Physical bullion that can get stolen or damaged? Cash (and then real estate)?
Not even that there is absence of evidence -- but absence of evidence is not evidence of absence. Moreover, your cherrypicking of "Internet-type" inventions that develop very quickly are definitely outliers. By contrast, the answering machine was invented in the 1930's, and didn't take off until 50ish years later.
It's absurdly and ignorantly early to declare "crypto has no utility."
just because you don't use it or put in the effort to look at different decentralized projects doesn't mean there are "no use-cases".
I think with the amount of activity on AAVE and yearn, plus the growth these projects have received have killed that argument. Very 2017 argument that no longer makes any sense and is presented by luddites.
Most the bottlenecks right now to why you don't have day-to-day apps deployed on ecosystems like ethereum is because of the gas prices. You have hundreds of very intelligent developers working to decrease this to fractions of a cent.
There are legit architectural changes like proof-of-staking and L2-proposed changes that will for sure reduce the price of a function invocation in ethereum.
But you probably don't care about this, because you'd rather hang your nose high and pretend that you're much smarter than a whole ecosystem of extremely talented developers (including some award winners). Enjoy that feeling mate, it's not going to last long and it's all entirely ego-based.
That coal-mine flood was in Xinjiang, and Xinjiang has now kicked out all its Bitcoin miners, because the only way it's profitable to mine Bitcoin with fossil-fuel power is when it's subsidized, and it was being subsidized. But subsidizing Bitcoin mining is unprofitable for any government, so these subsidy-exploitation setups tend to be short-lived.
90% of Bitcoin mining in the PRC got shut down permanently last month with little warning, dropping the hashrate by half: https://www.globaltimes.cn/page/202106/1226598.shtml. Presumably it will nose back up over the next few months once deals have been signed and the mining hardware has been installed in new places with cheap unsubsidized electricity—necessarily from renewable sources.
I agree with your skepticism about non-currency uses of blockchains. Some people do seem to be using ENS now, and I think smart contracts might become usable eventually, but I'm not confident blockchains will be part of smart contracts as they actually get deployed.
As for the 12-years-into-the-internet thing, well.
The ARPANET started running in 01969. The first version of the FTP protocol we use today (USER, PASS, SOCK, TYPE, BYE) was standardized in RFC 354 in 01972. The "Internet Transmission Control Program" (TCP), featuring SYN/ACK/FIN bits, but 20-bit host numbers (divided into a 4-bit network ID and a 16-bit "TCP address") and 24-bit port numbers, is specified in RFC675 in 01974, and experimental deployments started in 01975. Version 2 of TCP is IEN 2 from 01977. Version 3 of TCP, with a separate IP layer so you could use it for voice over IP, is from 01978. 12 years after the ARPANET's launch was 01981, which is when the Internet Protocol was finally standardized (in RFC 791, IEN 128, replacing the 01980 RFC 760) as a future replacement for NCP. The switchover from NCP to TCP/IP was January 1, 01983.
So 12 years after the internet's launch was, depending on where you count from, either 01981, 01987, or January 1, 01995. Even on January 1, 01995, most of the US still had no for-profit ISPs; the closest thing most people could get was AOL over dialup (probably 14400 bps), which had three million users (1.5% of the US population) and wouldn't let you browse the WWW. AOL added an email gateway to the internet in 01992, Usenet access in September 01994, and web browsing later in 01995, all paid by the hour. At some later point AOL started providing actual internet access (so you could, for example, use telnet and ssh and upload files via FTP).
It was clear to me what the internet's utility was as soon as I got on it in 01992, 23 years after it started. But in 01995 Bill Gates's The Road Ahead dismissed the internet as a primitive precursor to the "information highway" he imagined, so it wasn't obvious to everyone, even 12 years after the switchover of the ARPANET to TCP/IP.
Similarly, the utility of Bitcoin is obvious to me, too, and to millions of other people. I've written about it here before, for example in https://news.ycombinator.com/item?id=27448744.
You really seem like you're not open to having your mind changed here. You took many of the current use cases and threw it out for no reason. What would change your mind here?
I'm not making these estimates, so you can call bullshit but I'm just saying the numbers that have been reported.
It doooooes a lot actually. There are a lot of financial transaction tools, which are not reasonable to throw away. Ethereum alone is on pace to settle trillions this year in transactions. NFT's are a substantial market, and are more than just selling a jpeg (which is a massive business in and of itself). They're the more abstract idea of introducing uniqueness through scarcity into a system that is fault tolerant, distributed, and secure (without having to build that system).
Some of the best use cases I've seen are from Vechain (I invested in this project). Vechain does supply chain tracking, which you also threw away for no good reason, and they're currently live in the real world working with real companies. You can go into a Walmart in China and interact with their food supply chain tracking system today. They also just launched a covid vaccine passport for the San Marino government. There are video games being built on their ecosystem, just like there are on many other cryptocurrencies.
Comparing incremental advancements in technology to the fundamental creation of the internet and ecommerce isn't a valid argument for saying crypto isn't useful. Electric vehicles are junk because it's not a personal spaceship.
No one is saying we'll find a use case eventually. People were saying that 5 years ago, there are already use cases and people are building billion dollar companies in those spaces faster than Amazon grew to a billion dollars. You clearly have not been keeping up with this field, and throwing out anything that didn't fit into your narrative. You should try to revisit it with an open mind.
The blockchain is just a platform. You have to build projects on top of the platform. Asking what does it do doesn't make any sense. It's like asking what does a piece of paper do.
The real question to ask is not what does it do but whether the trade offs of using decentralised tokenised platform for building real world apps is useful or scalable. The answers to which are still being discovered.
> Then it flags bitcoin as an environmental hazard, though estimates seem to be ~50-70% of BTC energy use is from renewables.
Is Bitcoin offsetting other uses that those renewables would have gone for or are people building solar farms out of their Bitcoin gains to fund more Bitcoin?
Bitcoin mining can serve as a price floor to incentivize green energy production - ex. An otherwise unprofitable solar farm could be profitable because instead of peak production getting sent to the grid at low or negative rates, they can mine Bitcoin and monetize that energy that doesn't have other demand.
This is certainly not universally the case at the moment. It is probably offsetting in the majority of cases currently. But I bet there are a non-zero number of renewable energy products that were able to get greenlit purely because crypto mining can function as a buyer of last resort, and this number will continue increasing.
Bitcoin mining uses a higher proportion of green energy than most other industries though, so I think this energy use criticism is pretty shallow. Some people just don't like Bitcoin and so are enthusiastic to have a reason to complain about it that doesn't require any critical thinking about energy markets. These people believe Bitcoin is entirely worthless, so they'd complain about any level of energy usage, because there is no upside in their calculus.
So Bitcoin shouldn't use renewables because there may be other uses of renewables? I genuinely don't get the energy use argument, this is much more of a government policy problem than a cryptocurrency problem. It feels like this could be extended to any company or product you don't like because you want to save the clean energy for the approved uses.
"Then it flags bitcoin as an environmental hazard"
Well, it got that part right. Any non-POS scheme is just trading stake for something else, and buying and burning energy, no matter how green the source, is pure unnecessary waste. Skip the trading part and save the world.
I do agree, proof of work at this point is entirely outdated. I actually don't invest in Bitcoin because I think a lot of the technology is antiquated, and there are better solutions for everything but the network affect.
> and all but saying that the reason there are hackings to things like critical infrastructure is because crypto exists
Just to play devil's advocate, how do you imagine ransomware would work outside of crypto?
There had been a few toy ransomware attacks before Bitcoin, but the regulated payment industry ultimately prevented any major ransomware industry from developing.
Bitcoin has changed all of that. Since the release of CryptoLocker, the industry has exploded into a multi-billion dollar racket.
From my perspective, this industry did not and cannot exist absent cryptocurrency.
I don't think this is cause to shutdown crypto convertibility, but it also can't be dismissed out of hand.
I’m not too well read into this space, but I would argue a large cause in the boom of hacking is external to crypto. The fact that so much monetary value and information has moved online would make me believe the pie was by growing regardless of crypto. The article points out the Biden administration being unsure of how to tackle the hacking problem, but governmental infrastructure being hacked is not a monetary extraction problem, it’s a national security problem. I’m much more concerned about power companies being shut down than Target leaking customer records, for example.
I definitely won’t say crypto isn’t used effectively for ransomware payments, it’s obviously the current go to. My issue is the article seems to reduce it down to ceteris paribus, hacking wouldn’t be a problem. When many of the bad actors here are nation states, that is not a valid argument.
Don't call it Web 3.0 - these projects have proven very little to imply they are the true next progression of the "Web."
Most of the use-cases don't even especially benefit from decentralization. The main reason they have blockchains and coins is so the project founders can cash out the moment they release a mainnet (thus getting paid by the fans they hype up.)
Look at dfinity (ICP) for a recent example. First week or two it was selling for as high as $600ish and as low as almost $150. Now it goes for $44. Someone is always holding the founders' bag - their newfound cash came from somewhere!
EDIT: upon googling, it appears dfinity is getting sued for this potential pump and dump
That may be a fair criticism of the naming. My point was more that it doesn't make sense to be called cryptocurrency, and less that it's the true next progression of the web.
With regards to the cash outs, I think there's probably an argument to be made about web 1.0 and 2.0 companies that were highly unprofitable with no way to ever become profitable. There were investors propping up companies with bad fundamentals, IPO'ing, cashing out, and in the end the tech bubble pops and takes down the market and retail investors with it. Crypto definitely does it more quickly and violently, but it's not a crypto specific phenomenon.
Give me one Web 3.0 thing that a non-trivial number of people use that is not directly related back to cryptocurrency itself (speculation, exchanges, gambling, etc.).
A product? A service? A game? A hosting solution?
The only one I can think of is Sia and maybe FileCoin if they actually ship something useful, and those have only a tiny number of actual users.
I guess maybe Steemit if someone actually still uses that.
We are now in year 13 of the cryptocurrency revolution and I'm having trouble thinking of anything you can do with this stuff.
I described some of this in other comments, but my favorite use case is Vechain (I hold their coin). They primarily focus on supply chain logistics, Walmart uses them for their food supply chain. Food validation is a big issue in China, so you can scan a QR code and get information on where your food has been and the temperature it has been kept at all along the chain. They also just released a covid passport for the small country of San Marino.
Beyond just Vechain, Cardano is working with Ethiopia to give five million students a blockchain-based ID that will allow the government to track their academic performance. There are more examples like these, though admittedly many of them have been announced in the past year or so. Ethereum, which is a bit older than these projects, is on path to clear $1-2 Trillion this year.
I know the argument that this is early days isn't very compelling, but I think it makes more sense to look at generation 3 cryptos as the start of crypto's focus being fully blockchain projects instead of currency replacements.
Think about this in the context of the discussion. Does it follow that we should ban crypto if it doesn't appeal to you? Or should you just not use it personally?
"Cryptocurrency" is really an outdated name. Most of these don't claim to be currencies and aren't trying to replace standard money. Even bitcoin has pivoted to be a store of wealth with scarcity built in, akin to gold. Very few really think it should/will become a true replacement for typical currency at this point.
Edit: They do become a very valid replacement for a store of wealth in less stable economies however. Venezuela has seen a lot of utility from Bitcoin since their currency is even more volatile than Bitcoin is. You could imagine the quantity of countries that applies to grows as Bitcoin (or another coin) gets more adoption and it's price becomes less volatile. Particularly things like stable coins, which are pinned to the US dollar (1 stable coin effectively always equals $1).
> Some pretty wrong things in here, like insinuating that the only value of crypto is to criminals, and all but saying that the reason there are hackings to things like critical infrastructure is because crypto exists
Both of these are true.
> Then it flags bitcoin as an environmental hazard
So we can waste it on watching porn, pumping water to golf courses, running the light in your fridge, charging your fitbit, or whatever else you choose to do with it. You can extend that argument to anything that uses power which you don't approve of. Your problem isn't with crypto, it's with the power grid.
Here's a brilliant idea: what if you did the leg work to lobby your politicians to push for a power grid that did what you wanted without having to limit innovation...instead of complaining online?
the people calling to ban crypto don't care about the environment, that's just an easy selling point for them to garner public support from people who normally wouldn't care. It's all about control of the financial system
I think it's probably a lot of motives, but one of them is that most of our (USA) politicians are too old, and frankly many too dumb, to properly grasp nuanced topics like these. They don't understand crypto, or the internet, or cyber warfare, or larger economic conflict, or any number of critical things they should be well informed on. Their prime focus is on getting reelected and pushing their own agenda, not good stewardship of the nation. I agree that they are pandering on the environment point, there are much more valuable things to spend your time on if you're worried about the environment.
What's interesting about this article isn't so much the contents as the biography of the author: https://www.atlanticcouncil.org/expert/robert-a-manning/ - Atlantic Council, ODNI, US National Intelligence Council, US Secretary of State's staff, Council on Foreign Relations and more.
I'm not sure how much attention the idea of banning cryptocurrency has had from these kind of circles before.
Yeah, when the pipeline ransomware thing happened, I figured that we'd see some big crackdowns on internet freedom as a result. And he mentions the pipeline early on in the article.
CFR folks like Bob might be equally interested in stopping cryptocurrency as a way for countries subject to US sanctions, like Iran and Venezuela, to have access to the international payment system. But that's probably not as appealing a pitch for the UN Security Council, the G7, and the G20, who I think are his real audience here. He knows a unilateral move against cryptocurrency by USG would be not only very difficult because of domestic opposition but also a bit of an own goal, cutting the US off from the developing permissionless international economy.
But if he can convince other governments' advisors that Bitcoin poses a threat to them that outweighs any potential protection it grants them from the US, then those concerns go away. PRC is already on board; Russia and India could maybe be persuaded, having flirted with total cryptocurrency bans and then backed away from them; Brazil, Japan, Korea, Taiwan, the EU and Commonwealth countries are likely to be more difficult. No idea about Mexico, the Saudis, Turkey, and Indonesia—they've all been rather nervous about it, except in Mexico where it's fully legal.
agreed, that is certainly the most noteworthy aspect. I can't say im surprised. Financial hegemony is critical for state apparatuses to maintain power. Frankly I'm more surprised it's taken them this long to begin the crusade against crypto currencies. I only expect it to ramp up further.
If you view banning cryptocurrencies as a prerequisite to CBDC, social credit scores and negative interests rates, there are volumes of policy papers from the WEF and others.
> But dollars, euros and yen are backed by nations’ respective treasuries. If someone invents a cryptocurrency, any value is based solely on convincing others it has value.
They lost me here. Most countries indeed have currency that is backed by their nation's respective treasuries. However, those treasuries are filled dollars, euros and yen. All fiat money no longer backed by gold or anything tangible and whose values are based solely convincing others they have value.
The notion that nation-state issued fiat currency is based “solely” on convincing others they have value is quite a reductive over-simplification. The existence of organized societies with some central government body has shown value, and the means of exchange amongst citizens and with citizens of other societies is backed in part by that value. It’s quite a bit more complex than you suggest.
The value of fiat currencies is "based solely convincing others they have value" - it is trust in the issuer.
You are arguing that trusting issuers has been societal valuable, which sure - historically it has been for the fiat currencies that still exist (if you ignore survivorship bias).
Not sure what handwaving "society is valuable and that value is what backs fiat currencies" even means in concrete terms. The government has the power to print as much fiat currency as they want (and they frequently do with intentional inflation targets). There is nothing that stops governments from printing more money except fear that it will damage trust in their currency, leading to devaluation.
No, the value of fiat money is backed by being the only means of paying taxes. If you do anything productive in America, you'll have to find dollars to pay taxes, or you'll go to jail.
As long as it’s advantageous to those who own these publications to accumulate their share of BTC, ETH, or what have you, and once they’re satisfied the narrative will change.
If "banning" bitcoin really meant saying that exchanges can't let you turn dollars into bitcoins and vice versa ... could that finally make bitcoin an actual currency, where to get it you exchanged a good or service for it? Would the disconnect from the rest of the financial system mean that it wouldn't just be a vehicle for speculation?
I still think it's a silly system, where an extravagant amount of work is done so no one has to trust any central party (but all the speculators had to trust the exchanges). But I wonder if "banning" it could be the thing that actually lets it fulfill a little more of its original promise.
Pretty bold to lead the article with “I‘ve never quite understood.“ I think the article would have been way better if the author would have taken the time to at least understand a bit why cryptocurrencies are worth a lot to a lot of people.
Readit News
For people not in this world, cryptocurrency does NOT mean digital money. It needs to be rebranding. It's a wave of projects building (mostly) decentralized tools or things secured by a blockchain secured through some protocol, such as finance exchanges, art minting and exchanging for digital scarcity, video games, real world supply chain tracking, music creation + tracking (hard to determine who is in every song and what sampling they used to pay artists), general contract writing with built in logic to be able to have trust in an interaction without having to involve a third party. There are many more examples, but it's more apt to call it Web 3.0 than cryptocurrency at this point.
Bullshit. When one coal mine in a remote region of China flooded, the Bitcoin hash rate measurably dropped by 30%. Keep in mind this was just one coal mine. Not all of China's production.
https://fortune.com/2021/04/20/bitcoin-mining-coal-china-env...
> it's more apt to call it Web 3.0 than cryptocurrency at this point.
I've said this so many times: But what does it doooooo??? Name one project that isn't "speculation" or "loans" built on cryptocurrency that has seen any uptick or utility. NFTs sure ain't it. DAOs sure ain't it. Supply chain tracking sure ain't it.
I haven't seen one work. Don't say it's the early internet and we'll find one eventually, because it's been 12 years since Bitcoin's launch in 2009, and the ideas are all still junk. Widespread broadband to the home was in strong demand in the early 90s, and Amazon was already selling books while dwellings with connectivity were in the single-digit numbers. The 80s saw university lines saturated by BBSes, newsgroups and MUDs. There was far more demand than supply, and it was very immediately clear what the utility was.
I know you said no loans, but I can't skip mentioning DeFi which enables anybody to borrow their own money from themselves, anytime, fully electronically and without centralization.
Then you have smart contracts, which are like a computer, but on everybody's computer at the same time. You can write full programs with complexity nearing that of FizzBuzz and run them worldwide for only hundreds of dollars.
Just imagine a world without crypto. It would be like a world without hackysack, or a world without mail order swords on the shopping channel. Unrecognizable and primitive.
FYI, China kicked out crypto miners, which is why hash rates tanked in the last few months:
https://www.blockchain.com/charts/hash-rate
So we don't know what percentage of mining is even left in China.
Also, dirty energy is a regulatory issue. Externalities should be captured in the price with taxation, and coal mining should not be subsidized by a nation state. When you do those things, energy consumers won't want to use dirty energy, they'll flock to renewables.
Are you asking about Bitcoin or Crypto? Bitcoin doesn't do much atm, but Ethereum does stuff, and Bitcoin Cash is pretty practical as a currency at the moment. There's plenty that can be done, but the market will have to decide what to converge on.
If governments simply allowed cryptocurrencies to exist outside of any regulation except the obligation to pay taxes on transactions and gains, eventually participation would decline as users of the currencies lost their money to scams or mismanagement, in the absence of a state interest in protecting participants.
If the system is designed to resist state intervention, maybe letting it run as designed, and suffer the consequences, is the best approach. There's no need to regulate it out of existence just because it serves no apparent purpose. This is one case where the market will sort that out if we let it.
It does exactly what it set out to do in the first sentence of the original white paper.
"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."[0]
[0] https://bitcoin.org/bitcoin.pdf
In developing nations where the residents do not have access to regulated and "safe" investment vehicles like stock exchanges, where can they invest their saves? Physical bullion that can get stolen or damaged? Cash (and then real estate)?
It's absurdly and ignorantly early to declare "crypto has no utility."
I think with the amount of activity on AAVE and yearn, plus the growth these projects have received have killed that argument. Very 2017 argument that no longer makes any sense and is presented by luddites.
Most the bottlenecks right now to why you don't have day-to-day apps deployed on ecosystems like ethereum is because of the gas prices. You have hundreds of very intelligent developers working to decrease this to fractions of a cent.
There are legit architectural changes like proof-of-staking and L2-proposed changes that will for sure reduce the price of a function invocation in ethereum.
But you probably don't care about this, because you'd rather hang your nose high and pretend that you're much smarter than a whole ecosystem of extremely talented developers (including some award winners). Enjoy that feeling mate, it's not going to last long and it's all entirely ego-based.
It lets me transact value online without sacrificing my privacy.
90% of Bitcoin mining in the PRC got shut down permanently last month with little warning, dropping the hashrate by half: https://www.globaltimes.cn/page/202106/1226598.shtml. Presumably it will nose back up over the next few months once deals have been signed and the mining hardware has been installed in new places with cheap unsubsidized electricity—necessarily from renewable sources.
I agree with your skepticism about non-currency uses of blockchains. Some people do seem to be using ENS now, and I think smart contracts might become usable eventually, but I'm not confident blockchains will be part of smart contracts as they actually get deployed.
As for the 12-years-into-the-internet thing, well.
The ARPANET started running in 01969. The first version of the FTP protocol we use today (USER, PASS, SOCK, TYPE, BYE) was standardized in RFC 354 in 01972. The "Internet Transmission Control Program" (TCP), featuring SYN/ACK/FIN bits, but 20-bit host numbers (divided into a 4-bit network ID and a 16-bit "TCP address") and 24-bit port numbers, is specified in RFC675 in 01974, and experimental deployments started in 01975. Version 2 of TCP is IEN 2 from 01977. Version 3 of TCP, with a separate IP layer so you could use it for voice over IP, is from 01978. 12 years after the ARPANET's launch was 01981, which is when the Internet Protocol was finally standardized (in RFC 791, IEN 128, replacing the 01980 RFC 760) as a future replacement for NCP. The switchover from NCP to TCP/IP was January 1, 01983.
So 12 years after the internet's launch was, depending on where you count from, either 01981, 01987, or January 1, 01995. Even on January 1, 01995, most of the US still had no for-profit ISPs; the closest thing most people could get was AOL over dialup (probably 14400 bps), which had three million users (1.5% of the US population) and wouldn't let you browse the WWW. AOL added an email gateway to the internet in 01992, Usenet access in September 01994, and web browsing later in 01995, all paid by the hour. At some later point AOL started providing actual internet access (so you could, for example, use telnet and ssh and upload files via FTP).
It was clear to me what the internet's utility was as soon as I got on it in 01992, 23 years after it started. But in 01995 Bill Gates's The Road Ahead dismissed the internet as a primitive precursor to the "information highway" he imagined, so it wasn't obvious to everyone, even 12 years after the switchover of the ARPANET to TCP/IP.
Similarly, the utility of Bitcoin is obvious to me, too, and to millions of other people. I've written about it here before, for example in https://news.ycombinator.com/item?id=27448744.
I'm not making these estimates, so you can call bullshit but I'm just saying the numbers that have been reported.
It doooooes a lot actually. There are a lot of financial transaction tools, which are not reasonable to throw away. Ethereum alone is on pace to settle trillions this year in transactions. NFT's are a substantial market, and are more than just selling a jpeg (which is a massive business in and of itself). They're the more abstract idea of introducing uniqueness through scarcity into a system that is fault tolerant, distributed, and secure (without having to build that system).
Some of the best use cases I've seen are from Vechain (I invested in this project). Vechain does supply chain tracking, which you also threw away for no good reason, and they're currently live in the real world working with real companies. You can go into a Walmart in China and interact with their food supply chain tracking system today. They also just launched a covid vaccine passport for the San Marino government. There are video games being built on their ecosystem, just like there are on many other cryptocurrencies.
Comparing incremental advancements in technology to the fundamental creation of the internet and ecommerce isn't a valid argument for saying crypto isn't useful. Electric vehicles are junk because it's not a personal spaceship.
No one is saying we'll find a use case eventually. People were saying that 5 years ago, there are already use cases and people are building billion dollar companies in those spaces faster than Amazon grew to a billion dollars. You clearly have not been keeping up with this field, and throwing out anything that didn't fit into your narrative. You should try to revisit it with an open mind.
The blockchain is just a platform. You have to build projects on top of the platform. Asking what does it do doesn't make any sense. It's like asking what does a piece of paper do.
The real question to ask is not what does it do but whether the trade offs of using decentralised tokenised platform for building real world apps is useful or scalable. The answers to which are still being discovered.
Is Bitcoin offsetting other uses that those renewables would have gone for or are people building solar farms out of their Bitcoin gains to fund more Bitcoin?
This is certainly not universally the case at the moment. It is probably offsetting in the majority of cases currently. But I bet there are a non-zero number of renewable energy products that were able to get greenlit purely because crypto mining can function as a buyer of last resort, and this number will continue increasing.
Bitcoin mining uses a higher proportion of green energy than most other industries though, so I think this energy use criticism is pretty shallow. Some people just don't like Bitcoin and so are enthusiastic to have a reason to complain about it that doesn't require any critical thinking about energy markets. These people believe Bitcoin is entirely worthless, so they'd complain about any level of energy usage, because there is no upside in their calculus.
Well, it got that part right. Any non-POS scheme is just trading stake for something else, and buying and burning energy, no matter how green the source, is pure unnecessary waste. Skip the trading part and save the world.
Your examples of use are all good.
Just to play devil's advocate, how do you imagine ransomware would work outside of crypto?
There had been a few toy ransomware attacks before Bitcoin, but the regulated payment industry ultimately prevented any major ransomware industry from developing.
Bitcoin has changed all of that. Since the release of CryptoLocker, the industry has exploded into a multi-billion dollar racket.
From my perspective, this industry did not and cannot exist absent cryptocurrency.
I don't think this is cause to shutdown crypto convertibility, but it also can't be dismissed out of hand.
I definitely won’t say crypto isn’t used effectively for ransomware payments, it’s obviously the current go to. My issue is the article seems to reduce it down to ceteris paribus, hacking wouldn’t be a problem. When many of the bad actors here are nation states, that is not a valid argument.
Most of the use-cases don't even especially benefit from decentralization. The main reason they have blockchains and coins is so the project founders can cash out the moment they release a mainnet (thus getting paid by the fans they hype up.)
Look at dfinity (ICP) for a recent example. First week or two it was selling for as high as $600ish and as low as almost $150. Now it goes for $44. Someone is always holding the founders' bag - their newfound cash came from somewhere!
EDIT: upon googling, it appears dfinity is getting sued for this potential pump and dump
With regards to the cash outs, I think there's probably an argument to be made about web 1.0 and 2.0 companies that were highly unprofitable with no way to ever become profitable. There were investors propping up companies with bad fundamentals, IPO'ing, cashing out, and in the end the tech bubble pops and takes down the market and retail investors with it. Crypto definitely does it more quickly and violently, but it's not a crypto specific phenomenon.
A product? A service? A game? A hosting solution?
The only one I can think of is Sia and maybe FileCoin if they actually ship something useful, and those have only a tiny number of actual users.
I guess maybe Steemit if someone actually still uses that.
We are now in year 13 of the cryptocurrency revolution and I'm having trouble thinking of anything you can do with this stuff.
Beyond just Vechain, Cardano is working with Ethiopia to give five million students a blockchain-based ID that will allow the government to track their academic performance. There are more examples like these, though admittedly many of them have been announced in the past year or so. Ethereum, which is a bit older than these projects, is on path to clear $1-2 Trillion this year.
I know the argument that this is early days isn't very compelling, but I think it makes more sense to look at generation 3 cryptos as the start of crypto's focus being fully blockchain projects instead of currency replacements.
Edit: They do become a very valid replacement for a store of wealth in less stable economies however. Venezuela has seen a lot of utility from Bitcoin since their currency is even more volatile than Bitcoin is. You could imagine the quantity of countries that applies to grows as Bitcoin (or another coin) gets more adoption and it's price becomes less volatile. Particularly things like stable coins, which are pinned to the US dollar (1 stable coin effectively always equals $1).
Deleted Comment
Both of these are true.
> Then it flags bitcoin as an environmental hazard
This is true.
Motivating wealth production through destruction of the environment is irresponsible.
Green Energy production is an environmental boon
Motivating wealth production through green energy utilization is responsible.
Here is a brilliant idea...What if all of that renewable energy was...not wasted on crypto?
Here's a brilliant idea: what if you did the leg work to lobby your politicians to push for a power grid that did what you wanted without having to limit innovation...instead of complaining online?
I'm not sure how much attention the idea of banning cryptocurrency has had from these kind of circles before.
CFR folks like Bob might be equally interested in stopping cryptocurrency as a way for countries subject to US sanctions, like Iran and Venezuela, to have access to the international payment system. But that's probably not as appealing a pitch for the UN Security Council, the G7, and the G20, who I think are his real audience here. He knows a unilateral move against cryptocurrency by USG would be not only very difficult because of domestic opposition but also a bit of an own goal, cutting the US off from the developing permissionless international economy.
But if he can convince other governments' advisors that Bitcoin poses a threat to them that outweighs any potential protection it grants them from the US, then those concerns go away. PRC is already on board; Russia and India could maybe be persuaded, having flirted with total cryptocurrency bans and then backed away from them; Brazil, Japan, Korea, Taiwan, the EU and Commonwealth countries are likely to be more difficult. No idea about Mexico, the Saudis, Turkey, and Indonesia—they've all been rather nervous about it, except in Mexico where it's fully legal.
They lost me here. Most countries indeed have currency that is backed by their nation's respective treasuries. However, those treasuries are filled dollars, euros and yen. All fiat money no longer backed by gold or anything tangible and whose values are based solely convincing others they have value.
You are arguing that trusting issuers has been societal valuable, which sure - historically it has been for the fiat currencies that still exist (if you ignore survivorship bias).
Not sure what handwaving "society is valuable and that value is what backs fiat currencies" even means in concrete terms. The government has the power to print as much fiat currency as they want (and they frequently do with intentional inflation targets). There is nothing that stops governments from printing more money except fear that it will damage trust in their currency, leading to devaluation.
The reason people believe in the worth of cryptocurrencies is greed and fear of missing out.
I still think it's a silly system, where an extravagant amount of work is done so no one has to trust any central party (but all the speculators had to trust the exchanges). But I wonder if "banning" it could be the thing that actually lets it fulfill a little more of its original promise.
Undermined his credibility right there. Not worth reading the rest.
Dead Comment