| HN Mirror

(First, I love this post; very excited to dig in)

--FX controls--

Yeah, so I argue all the time that lumping in places like the US/UK/France/Germany with places like Turkey or Venezuela doesn't make sense because of the differences, and that governments can just use the violence monopoly to coerce people to do whatever. In other words I argue that the "crypto fixes monetary policy mismanagement" argument is pretty ignorant. But on the other hand, my argument is also ignorant because:

- US/UK/France/Germany mismanage monetary policy tremendously: recessions kill people, there's deep income inequality directly linked to monetary policy, etc.

- Crypto does actually insulate against inflation (I mean, kind of anyway), and the scam of the day doesn't make that any less true.

- People do use crypto for useful things--USDC in Venezuela as you point out is useful, and to the people it's useful for, it's definitely not nothing.

--Scams--

I'll admit scams aren't as bad now. But on the other hand I think a lot of that is because Western governance and money got involved and people went to jail.

--Being Permissionless--

The way I think of this is based on social contract theory, i.e. I strongly believe that permissionless systems evolve into systems of coercion, because people will amass power and use it against each other. Maybe that's getting a 51%, mining, controlling exchanges, controlling the use of or purchase of crypto, etc. To kind of skip to the end here, I don't believe the libertarian ideal of individual, free actors can ever exist, because the benefits of teaming up and coercing are so dominating.

So I'm "if you can't beat 'em, join 'em" on this. If we're faced with roving bands of street crypto gangs, we should just make a bigger gang and establish some rules. That's basically a government or a bank, and then like, maybe we'll feel like we wasted a lot of time. Unclear.

--Governance and politics--

The definition of politics is "the process by which more than one person makes decisions". They're pretty inescapable. And so is governance, FWIW. That said, to your point, I think you can do a lot to dilute it. You get into kind of a "choose your tyranny" situation in these cases though like, do you choose:

- Tyranny of the majority vs. the minority (collective action vs. individual rights)

- Tyranny of the state vs. the mob (central vs. diffuse authority)

I don't know exactly where Bitcoin lands on this, tbh. On the one hand you could say it's diffuse authority because of PoW, or because of the consensus algorithm, or the "no middleman" stuff. On the other, you can say that because devs control the protocol, it's super centralized. Suffice it to say it's complicated.

--Other coins--

The refrain I often hear is "Bitcoin is just a protocol, anyone's free to start their own separate network", but that hasn't been successful. It suggests that what's important is not necessarily the protocol, but the network effects of so many people using the network. Like, there are better coins out there (Monero, Zcash, probably ETH) and coins using the exact same protocol you could buy into for way less than Bitcoin. These all test the hypothesis that the protocol matters more than the market cap or user count. But the test came back, and the results are that network effects and market cap pretty much explain everything. More than anything, this makes me pessimistic about cryptocurrencies. I think it's beyond clear Bitcoin is a speculation casino, altcoins are for hipsters, we've built an abominable bubble, and we've burned an insane amount of carbon to do it.

--Lightning--

Well, I guess I'm absolutist about financial transactions. I really can't imagine building a(nother) financial network that has unfixable risks of fraud built in. One of the promises I most hoped blockchain tech delivered on was fixing fraud. But you really can't, Sybil is in tension with latency and availability (either 100% of the nodes agree something happened or there's room to take over enough nodes to commit fraud--sure at 99% it's very very hard, but that's not the same as impossible, but also that might be fine), and you have computational complexity problems besides, i.e. why would anyone volunteer to process transactions for free, which also costs them electricity or w/e.

More concretely, I just can't seem to set a limit in my head of what would be an acceptable amount of money to lose to Lightning fraud. Too low, like $5, and you drastically limit its utility. Too high, like $50, and you essentially can't use it in poor parts of Africa for example, where people aren't gonna risk a month's income on your dodgy protocol. Well, maybe they well as long as you don't tell them it's dodgy.

--Fix the money, fix the world--

I have never heard this, and I absolutely love it. But it actually made me think that maybe what really irks me about cryptocurrency is that it accepts the premise of capitalism. I actually think money is the problem. Like, when you think about the lengths people are going to to mine BTC, which is a system deliberately set up to get people to process transactions, it feels exactly like capitalism run amok. None of this is good, right, like no one thinks the state of BTC mining or the tenuousness of ETH PoS (don't get me started) is really what success looks like.

I just don't see how cryptocurrency fixes our social ills, and at the end of it, I can't help but think of it purely as a distraction from income inequality. I'm not super interested in fixing the banking/currency/investment system. I think people should get food, clothes, child care, shelter, health care, transportation, and education for free. Anything past that is a bonus, and I don't care what currency it's denominated in.

I think the cryptocurrency community named the villain right: investment bankers. But like, now the two communities are inseparable, and some of the most lauded people in the crypto community are essentially investment bankers, just in a handful of crypto commodities. Are average people getting rich from Bitcoin more than the already wealthy? It certainly doesn't seem like it to me.

So I think we need a little bit of a reset. There's clearly a lot of energy around this stuff, whether it's the crypto community, OWS, progressive Democrats, whatever. I think if we got our shit together and worked for big, structural change, we could really do something--in our lifetimes. But from where I sit, crypto ain't it.