[adwhit]

The astonishing amount of time, money and effort that has been put into cryptocurrencies is a sociological marvel. Every emotion, every cognitive bias, every aspect of the human experience is on display. And it's all fully documented, in real time. Mass delusion in Big Data. A thousand sociology PhDs could be written about reddit's /r/cryptocurrency alone. A joyous, despairing, dissonant, gloating, brooding, witty, witless, confusing, euphoric mass.

This article is part of a curious subgenre of cryptocurrency literature, that of an advocate of one cryptocurrency (Ethereum) holding forth against a different cryptocurrency (EOS). Do the words have any meaning beyond the confines of the beautifully elaborate internal world in which they reside? Perhaps, in a strictly metaphysical sense. I can't appreciate it, or even comprehend it, but I can sit back an delight that such a thing exists at all.

[seibelj]

Ethereum is unquestionably an interesting technology. Whether the price is justified is a matter for the markets, which currently place several billions of dollars of value on it. If you are so certain it is mispriced, there are numerous places for you to profit from such stupidity, if you are confident enough to put your money up.

Vitalik is the benevolent dictator for life of Ethereum, and EOS is a radically different model than proof of work blockchains like Ethereum and Bitcoin. However Vitalik and the ETH community recognizes there is some value in proof of stake and is working on their own implementation which is different than EOS’ model.

Cryptocurrencies make us question why money has value, what makes an asset, and all sorts of interesting philosophical and economic questions. I wouldn’t write off the entire industry and technology. It has been attacked by intelligent people for a decade and it keeps moving forwards.

[wdewind]

> Cryptocurrencies make us question why money has value, what makes an asset, and all sorts of interesting philosophical and economic questions.

Honestly these questions have all been considered before, answered, and codified into law, and the crypto communities are full of people who have no idea what is going on around them. The banking systems we have are the result of us considering these questions, deciding politically we want something very different, and then building the technical systems that match that design.

The classic example is investor accreditation laws, and why, as far as I can tell, there isn't a single ICO that doesn't violate them. It's not that no one considered whether or not you should be able to raise money from many different people, and it's not been logistically complicated to do that for at least three decades. The reason is that the political will does not exist.

[teknopurge]

> Honestly these questions have all been considered before, answered, and codified into law, and the crypto communities are full of people who have no idea what is going on around them. The banking systems we have are the result of us considering these questions, deciding politically we want something very different, and then building the technical systems that match that design.

Crypto is saying that because of the evolution of institutions surrounding banking and politics there are many inefficiencies(and malevolent actors) that have become ingrained in the poli-fi complex. Many of these projects(the 20% that are legit) aim to solve various issues that have been identified in the "free market" - whether it's reducing settlement time of cross-border payments or efficiently pricing what a unit of cloud compute and storage can be, blockchain is a novel excuse to revisit many problems with lazy answers.

[wdewind]

The technology is part of the institutions, which are both derivative of the politics, which is where these systems are really designed. I'm not saying the banking system is perfect, but the ideas coming out of crypto aren't new from an economic perspective, and frankly aren't really even interesting.

[seibelj]

I think you are being extraordinarily flippant in your descriptions of cryptocurrency. They are fascinating and have captured the popular imagination, at least in terms of awareness of bitcoin and how frequently it’s mentioned.

You have clearly made up your mind and I won’t attempt to change it. But for anyone reading, an asset, created out of nowhere, that has no control from any authority and cannot have any control, is worth $100 billion in a decade. This is an amazing feat, and is indeed very interesting.

[wdewind]

I don't think I am. I've spent a ton of time in the community, I've owned a bunch of different currencies, and I've spent a lot of time thinking about the implications of the technology. The ideas are fun, but they aren't new, and we can reason about why they still wont work.

One reason cryptocurrency "wont work" (admittedly vague term, but I'm happy to shoot down any definition of "work" you have because I think they are truly useless outside of a tiny portion of people with very specific needs) is simple specialization of labor: people do not want to be engaged in the process of running a currency or a government, which is why, among many other reasons, banks and representative governments exist. And you see this pattern already repeated with crypto where any meaningfully large currency has extremely concentrated ownership. This is just swapping one set of large, monolithic bankers for another one.

Another reason cryptocurrency "wont work" is that everything it depends on is completely derivative of political and technical systems that are designed to prevent decentralized control. The internet exists on networks owned by companies like Verizon, on computers owned by Amazon, and is regulated by the US government. If cryptocurrency was going to be truly revolutionary in anyway the US federal government (and others) already have multiple built in kill switches for it. Sure you can cold store your hashes (even though we all know most people just have Coinbase wallets), but the utility of the network is trivial to compromise or destroy for a state level actor. And as an aside: most crypto is actually regressive from a privacy/personal liberty standpoint when compared with cash, or even the current banking system in many ways.

One more reason crypto "wont work" is that I just haven't heard a single use case for it. The classic "remittances" use case makes no sense because you still have to change the crypto for real currency, which is where the cost is, (yes, only until the currency is meaningfully bootstrapped, let me know when that happens). You don't pay Western Union 15% to flip bits in their servers, you pay them 15% because they put a guy with a gun next to the actual money in the relatively less safe country you are sending money to.

I will remind you that Lehman Brothers was worth about $70B at its peak, in a highly regulated market. $100B is big but far stranger things have happened than an unregulated public market being wrong about things this size. The incentives to pump something like this up are massive, and the market is irrational in the short and medium term. There are a LOT of really rich people out there who feel like if they hadn't missed "the internet" they could be even richer, and we managed to convince them crypto might be the next internet. To your point: that in and of itself, from a sociological perspective, is fascinating.

I do have strong opinions, but they are held loosely and they are ones I hope to be wrong about, so I'm open to discussion.

[ElBarto]

They could at least offer free tulip bulbs with every coin.

[seibelj]

Investor accreditation laws are USA specific. There is no such concept in other countries in most situations. They are such a bad law they congress finally reformed them with the JOBS act and now allow investment of startups companies by anyone.

ICOs in the USA only take accredited US investors now. That has been standard practice for a year now.

Finally, I would not agree that the political system has perfect solutions to everything and therefore cryptocurrencies are irrelevant. The financial crisis alone is proof that things can go terribly wrong.

[wdewind]

> Investor accreditation laws are USA specific. There is no such concept in other countries in most situations. They are such a bad law they congress finally reformed them with the JOBS act and now allow investment of startups companies by anyone.

Almost all countries that have public markets have a similar form of regulation.

> ICOs in the USA only take accredited US investors now. That has been standard practice for a year now.

Right, which makes them not significantly politically different from regular securities.

> Finally, I would not agree that the political system has perfect solutions to everything and therefore cryptocurrencies are irrelevant. The financial crisis alone is proof that things can go terribly wrong.

I'm not here to defend the law, I'm saying the decisions weren't made because crypto currency markets simply weren't possible then, the decisions were made because no one wants this, really. If you want to change the financial system you need to do it from the regulation side, this is not a "build it and they will come" situation. These aren't new ideas, people just forgot we already decided we don't want them. Maybe that's changed, but it's not clear why or how.

[SpicyLemonZest]

The question isn't whether the price is right or wrong, but what it's a price of.

For example, the market cap of Tether is a couple billion dollars. This doesn't mean that Tether as an abstract concept is worth a couple billion dollars, or even that market participants think it is. It just means that there are a couple billion Tether tokens floating around, and people are confident that they'll get $1 for their Tether if they want.

[TaylorAlexander]

The same is true of the stock market, or regular “fiat” currency.

I guess the question is, does it matter if it’s “not really worth it”?

The fact that people have been willing to pay so much for US dollars or British pounds or Japanese yen has meant a lot in this world.

Isn’t it justified to awe at the power of a decentralized currency? Certainly it’s in the realm of heady ideas.

[airstrike]

> The same is true of the stock market, or regular “fiat” currency.

No, it's not. Stocks are priced at the present value of future cash flows generated by the underlying assets.

Fiat currency has no value in and of itself. Foreign exchange is essentially determined by the difference in interest rates between countries (and investors' beliefs as to which way those interest rates will go in the future). Those interest rates are (indirectly) related to what is produced by each country.

Bitcoin is just plain make-believe.

> The fact that people have been willing to pay so much for US dollars or British pounds or Japanese yen has meant a lot in this world.

People also gave Bernie Madoff ~$65 billion dollars and it was all make-believe as well.

> Isn’t it justified to awe at the power of a decentralized currency?

Decentralization for decentralization's sake isn't inherently valuable. Or at least I wouldn't argue that to be an axiomatic truth. The burden of proof is on the bitcoin bulls.

[gfodor]

Stocks are not priced at the present value of future cash flows of the underlying asset. You're conflating valuation metholdogies with price. Stocks are priced at whatever the market decides, which may or may not be based at all on market participants' assessment of future cash flows.

[airstrike]

I'm not conflating things. "What the market decides" is either the PV of future cash flows or investors' expectation of what other market participants estimate the PV of future cash flows to be. It's turtles all the way down.

Markets aren't perfect but they are efficient; feel free to believe in the strength of that efficiency as you see fit, but in any case there is an underlying asset that generates cash flows.

You can nitpick arguments in my response, and I'll be happy to clarify any omissions, but my whole point is that crypto has no similar underlying asset and is therefore an entirely different beast.

[Terr_]

> If you are so certain it is mispriced, there are numerous places for you to profit from such stupidity, if you are confident enough to put your money up.

"The market can stay irrational longer than you can stay solvent."

[pjc50]

> numerous places for you to profit from such stupidity, if you are confident enough to put your money up.

I'm confident that betting on an unregulated asset on an unregulated exchange is a good way to get my money stolen.

[betterunix2]

It is not the last time we are going to see this sort of thing on the Internet, because, contrary to the overhyped media coverage, "blockchain" is not the revolution; the Internet is the revolution, and things like blockchains, P2P filesharing, the Web, and so forth are just the applications society is experimenting with for a previously inconceivable technology. We are a long way from a steady state and I expect to see this pattern of behavior several more times in my lifetime (by historical standards, we as a society are just starting to understand this technology, and it will be another century or two before society has internalized the Internet).