[fullshark]

Money. A few engineers are impressed by the technology but most people are excited by the money and prospect of a lot more money in the future. That's what drives crypto fanatics instead of trying to generate value and that's why I think it will ultimately fail.

[thinkmassive]

What's going to fail? Crypto fanatics? Cryptographically-secured trustless distributed systems? All of cryptography?

[john_moscow]

"Trustless" is a very tricky concept. Instead of trusting a centralized authority bound by laws and regulations, you trust an assumption that enough independent parties will continue spending significant amount of computation power on mining without merging or colluding to execute a 51% attack. It holds for now, but once the spirit of the 2017's hypergrowth fades away, things may start to look differently.

[GenericsMotors]

And proof of stake has its own problems, if the EOS project is anything to go by...

[TTPrograms]

EOS's issues are due to its convoluted governance structure, not POS.

[GenericsMotors]

Not having one vote per person seems to be one of the main grievances. How will ethereum solve this aspect?

[TTPrograms]

Voting has nothing to do with it, let alone votes per person. PoS doesn't require a voting system as EoS has implemented. The problem is having transaction inclusion decided by individuals that are voted in. It's analogous to having a democratic-republic government running a computer program.

[fullshark]

The Ethereum ecosystem and its derivative coins will not gain adoption among anyone except a passionate sub cult which will eventually go to zero.

[ericb]

I can't really understand this point of view.

Digital scarcity is finally invented, but people feel like it will have no use-cases?

Automated finance bots (smart contracts) that work without keeping a server up has no use-cases?

All fiat currencies are deflated continuously, but you believe 100% of people will prefer this?

The ability to embed money into a digital good has no value?

How can it ever go to zero if there's someone out there who thinks it might be worth accumulating just for the remote chance that one of these ideas works out?

The idea of it going to "zero" seems irrational to me.

[root_axis]

> Digital scarcity is finally invented,

Totally untrue. Cryptocurrencies are artificially scarce, not actually scarce; this is most obvious when two chains hard-fork and the sum of their combined value exceeds the total value of the parent chain. You can't "fork" a scarce resource.

Even without a fork, the scarcity is still an illusion because the consensus protocol can be modified to create an infinite number of tokens if that is the prerogative of the developers or community.

> Automated finance bots (smart contracts) that work without keeping a server up has no use-cases

Of course an automated finance bot needs a server, it's just a distributed and computationally expensive one instead of a centralized one that costs pennies to operate (and I say this as someone who has written profitable trading bots)

> All fiat currencies are deflated continuously, but you believe 100% of people will prefer this

The reason people prefer fiat money is because fiat money can be used buy goods and services and cryptocurrencies generally cannot without jumping through a bunch of hoops that offer no clear benefits in return. The OpSec that goes into "being your own bank" is not worth the cost to the overwhelming majority of people.

> How can it ever go to zero

I do agree that it is unlikely to ever go to zero simply because the limited utility cryptocurrencies do provide (irreversible pseudonymous online payments) will always have a niche use case that will keep the price above zero.

[ericb]

> You can't "fork" a scarce resource.

A fork gets you nothing on the original chain, just like inventing "new dollars" gets you nothing except what the market decides "new dollars" are worth. Digital scarcity is still there. If I have an item on that blockchain, you can't take it from me by forking. The only way to "move" that asset would be to get my private key. Forks are an anomaly the market is still figuring out.

> Of course an automated finance bot needs a server, it's just a distributed and computationally expensive one instead of a centralized one that costs pennies to operate

This misses the point. If I want to make a trading bot, I have to find a host, initiate a business relationship with them, and keep it running and highly available. If I make an ethereum smart contract, I set and forget. If I want people to interact with my bot and know it's source code, I can do that on ethereum. Is there another way you can think of to do this and have the bot be transparent--in other words a guarantee that the source code you looked at is actually the source code you're interacting with?

> The OpSec that goes into "being your own bank" is not worth the cost to the overwhelming majority of people.

This is only true until people notice the deflation. The ability to convert electricity to money that doesn't automatically shrink (even if it is not ready-cash) is very valuable in places where it is shrinking quickly.

[lavrov]

Forks aren't as simple as you might think - who gets to determine what the "original chain" is in the event of a fork? Suppose that ETH forked and one version changed some consensus rules to increase the supply of currency, and Vitalik, the Ethereum Foundation, all of the miners/stakers, and users moved to that chain - wouldn't that be ETH? But it would violate the principle of fixed digital scarcity.

Confiscation of assets is obviously possible via forks as well, but the fact that someone can't take your money without your private key doesn't relate to scarcity.

[bordercases]

> digitally scarcity

As long as crypto is pegged to a fiat currency like USD then the scarcity effect is going to be destroyed by speculative valuations.

USD isn't going to stop being fiat because it's too useful for it to be fiat when doing market regulation.

USD might stop being standard currency, but I expect other countries are going to maintain fiat standards because being able to vary the nominal amount of money supply is a better policy tool than merely controlling gold, because it opens up another theater of war beyond maintaining hard power.

[Barrin92]

>All fiat currencies are deflated continuously, but you believe 100% of people will prefer this?

I have no idea if 100% of people will prefer it, certainly, some who hold immense amounts of a currency will not, but it was one of the smartest ideas mankind ever had, because it introduced the ability to control the money supply and made currency a very important tool in ensuring stability and made it an effective means of exchange.

Cryptocurrencies are not a means of exchange. They're basically a pile of gold that people imagine themselves sitting on and that increases in value without them doing anything. Which is good if you're one of the few people who have much of it, but it is absolutely detrimental to society at large, which is uninteresting to the libertarianism on steroids that underpins the crypto-craze.

[ericb]

> it is absolutely detrimental to society at large

This may or may not be the case, but regardless, individual decisions are usually made based on an individual's self-interest rather than the warm fuzzy feelings about helping society.

> Cryptocurrencies are not a means of exchange.

It is not necessarily true that that will remain the case. Either way, that doesn't matter if society coalesces around one of them as the "WorldWide Ledger" because individuals are incentivized to avoid inflation.

[Barrin92]

There is no incentive for any average citizen to engage in crypto-currency activity if it is a shoddy means of exchange and favours individuals who own a large pile of it. Most individuals are debtors, not creditors, and for them, inflation is a boon because it benefits them and erodes debt burden over time at expense of creditors.

It is in the interest of someone who uses money as a means of exchange and not as a store of value (which is the overwhelming majority of individuals) to reject crypto-currencies in favour of fiat currency.

Your average citizen gains nothing from adopting a currency that is highly volatile, concentrated in the hands of a few, and awful at completing everyday transactions.

[IllogicalLogic]

Market forces will ensure a bitcoin exodus until central bankers stop acting like mental patients with unlimited printer ink cartridges.

The Bretton Woods System ended under Nixon to prop up the military ambitions of this nation, bad move using debt to start pointless wars. Current monetary system structure is deeply flawed, until reform BTFD in BTC.

Note: If you don't feel like paying for the next war, it's a nice bonus in BTC's favor.

[gnarcoregrizz]

Individual cryptocurrencies are inflationary or deflationary depending on their algorithm. Monero, for example, has a 2% tail inflation built in to account for lost money and an expanding economy. Inflation can also be tweaked or changed based on an agreement of the miners, or whatever else is built into the protocol - it could be a consensus mechanism beyond mining, or a central administration (which wouldn't be different than fiat really). My main gripe is that the popular logarithmic inflation curves are WAY out of whack and reward the early adopters way too much, making it more of a ponzi scheme than something useful, and ultimately making themselves poorer because if someone feels ripped off, they can invest in a new coin where they are the early adopter, essentially inflating the total money supply.

That said, inflation isn't always a good thing for some people. Neither is a centrally controlled money supply which also has its own winners and losers

[Barrin92]

Sure you can conceive of a crypto currency that is centrally controlled, targets inflation and focusses on price stability, but then you have simply invented 'crypto-fiat'.

The key point is that Ponzi schemes you are talking about are not an accidental byproduct, they're the entire point. There's no reason to reinvent electronic banking, we already have electronic fiat money that works very reliably.

Cryptocurrencies are digital gold and basing an economy on them would be like bringing the gold standard back. The problem being that every economist will tell you, for good reasons, that this is a terrible idea. Cryptocurrencies are not a technological innovation, they're a technological regression. They make things that we already can do more complicated and energy expensive which is the opposite of what technology is supposed to do.

[twerpy_d]

It has already gained adoption outside of that sub cult. All of the major financial institutions are researching applications of blockchains - many on top of private ethereum deployments. Ethereum is PROGRAMMABLE MONEY. It's a technology that's certainly here to stay, but that's not to say that ethereum itself will be the dominant platform.

[cryptobeanbaby]

>Ethereum is PROGRAMMABLE MONEY

What if someone just programs more programmable money?

Also why would anyone want to use a system where over 71% of all money is owned by a small group of anonymous oligarchs?

  Presale ICO / Premine ( max cost $0.50 USD per ETH  )
  = 72,009,990 ETH
  
  Total Supply today (Jul 19th 2018)
   = 100,773,797 ETH

  Source:
  https://etherscan.io/stat/supply

Not to mention, Ethereum and DAPPs can't validate any interesting external data without relying on centralized trusted data sources - at which point it becomes cheaper, more efficient, practical and legally accountable to just set up a normal database app.

[twerpy_d]

Most financial applications or experiments in the space are not conducted on the public blockchain so the oligarch aspect of it is not applicable - and no someone can't just program more money on the public blockchain - the blockchain exists to validate the amount of money flowing through it. If someone "programs more" that's essentially a fork and they can't transact with it unless other folks in the network fork as well.

[blocked_again]

Similar statements were made about the computer and Internet as well.

[simias]

I hear this argument a lot, I'm not old enough to remember these times but I wonder how much is true. According to Wikipedia ARPANET was established in 1969, then:

> In 1971, Ray Tomlinson, of BBN sent the first network e-mail (RFC 524, RFC 561).[59] By 1973, e-mail constituted 75 percent of ARPANET traffic.

> By 1973, the File Transfer Protocol (FTP) specification had been defined (RFC 354) and implemented, enabling file transfers over the ARPANET.

This is what ARPANET looked like in 1974, or 5 years after its establishment: https://upload.wikimedia.org/wikipedia/commons/0/00/Arpanet_...

Meanwhile Bitcoin is almost 10 years old and all we have is speculation, scams, a near-useless currency and many promises. What we don't have is a useful application that showcases what only cryptocurrencies can do.

[thinkmassive]

I hear many influencers in the space (mainly in podcasts from a16z and Laura Shin) claim that crypto is matured to the equivalent of the mid-90's internet, but I'm skeptical it's anywhere close to that far along. Thanks for sharing these ARPANET milestones, it puts the situation in a better perspective.

NCSA Mosaic was released in 1993[1], so I think "mid-90's" is convenient for people who can't easily grasp what the internet was prior to the web. The TCP spec was published in 1974 and became a standard in 1983[2].

Consider these milestones in the crypto space[3]...

> 2008 bitcoin whitepaper published

> 2009 first bitcoin transaction sent

> 2010 Mt Gox bitcoin exchange established

> 2011 BTC market cap exceeds $1 billion (indicates activity and liquidity)

> 2015 ethereum launched

> 2017 crypto market cap exceeds $100 billion

We're still seeing early protocols contending to become standards. The analogy isn't perfect, but Bitcoin and Ethereum seem more likely to be analogous to ARPANET than to TCP/IP. It will be a couple more years before blockchain interoperability platforms (like Cosmos[4]) are fully operational, and another year or two after that before we get a killer app that's as widely accepted as the first web browser.

Returning to your final point, the amount of utility already derived from Bitcoin and Ethereum is fairly impressive considering their young age.

[1] https://en.wikipedia.org/wiki/Mosaic_(web_browser) [2] https://en.wikipedia.org/wiki/Internet_protocol_suite [3] https://cryptotimeline.com/ [4] https://cosmos.network/

[sincerely]

>What we don't have is a useful application that showcases what only cryptocurrencies can do.

We do, and it's been running basically since shortly after bitcoin's creation: buying drugs. If mainstream cryptocurrency interest goes back to zero (which seems totally possible), people will still be using bitcoin/monero to buy drugs online.

[GenericsMotors]

And for a comparison in the same tech era: Facebook had more than a billion users after 10 years.

The "its still early days!" argument holds no water.

[whb07]

Terrible comparison bro. One company is built on tech that’s been around for decades.

[fullshark]

TBF I own some Ethereum as a hedge in case I'm wrong, but everything I read about it in terms of practical use, I find not impressive (beyond the tech which is impressive).

The computer and internet I think it was easier to see the practical value there (though not necessarily the final form both would take) but that may be 20/20 hindsight.

[ggg9990]

And similar statements were also made about Pet Rock and Beanie Babies.

[UncleMeat]

People said X about Y and Z. Y was successful. Therefore Z will be successful.

This is invalid reasoning. People said lots of things about lots of failed technologies too.

[dlwdlw]

A similar sentiment drove the technocratic elite to a centralized economy in communist china. It may not be beautiful or ideal but it’s fairly effective at coordinating large amounts of people, especially if they are at odds somewhat.