[nrzd]

I’m blown away by how anti-crypto this discussion is. I hadn’t realized how negative the prevailing sentiment is on Hacker News.

One argument seems to be that cryptocurrency is purely speculative, which is apparently a dirty word. What about the stock market? What about any kind of investment? If you truly believe that cryptocurrency is the basis for a superior economic system, isn’t it rational and wise to put some of your savings there?

Another argument is that crypto enables ransomware attacks. This to me sounds akin to saying “encryption enables child exploitation”. I.e. it focuses on one abhorrent element of society that would take place no matter what and blames its existence on a system which has great potential for good, a kind of propagandist thinking.

Another argument is that Banks will be hurt by crypto. Good! Any epochal transition can be tumultuous, but in my view disrupting the basis of the greatest wealth inequality known to history is a good start. We’re not talking about “banks” that operate on a local or regional basis — these can adapt to using new technology and serve the same people — we’re talking about multinational Banks which went beyond skimming the cream long ago and don’t aparently have people’s best interests in mind.

[AlexandrB]

> One argument seems to be that cryptocurrency is purely speculative, which is apparently a dirty word. What about the stock market? What about any kind of investment?

Most other assets represent ownership of... something. A company, a commodity, property. Cryptocurrency is closest to either a fiat currency without the government backing that typically tries to stabilize those. Or to more exotic and abstract financial instruments like credit default swaps or shorts.

Basically what's missing is the ability to even guess at the "true" value of cryptocurrency. There's no P/E ratios to consider because the only thing Crypto "produces" is Crypto transactions. It's also impossible to even guess at a floor or ceiling for the price of a cryptocurrency. The only thing that determines their price is human sentiment - a very fickle input.

Because of this, it's likely that cryptocurrency is vulnerable to market manipulation. Both through large transactions and through marketing. See also: the ample evidence of wash trading in the NFT space. In these kinds of situations my feeling is that if I'm not the one doing the manipulating then I'm the sucker on the other end.

[sowbug]

> human sentiment - a very fickle input

Ordinary accounting principles already have a concept for this: goodwill. If a business's valuation exceeds the net of its tangible assets minus liabilities, then that intangible asset is called goodwill.

Goodwill is neither a strange concept nor inapplicable to virtual currencies/assets. Instagram's value as a business entity (yes, I know it's owned by Meta) clearly exceeds the value of the source code, real estate, office furnishings, accounts receivable, etc. A competitor could duplicate everything Instagram does, but the competitor wouldn't be as valuable as Instagram. That difference in value is goodwill. In the tech industry, where we give new names to old things, we call it network effects. The Instagram network is an intangible asset that has real value, which you can't derive solely from Instagram's tangible assets. That company had to build a product and become extremely lucky that it caught on and became popular. Instagram is valuable because its users think it's valuable. If you aren't an Instagram user, you probably don't see its benefit and might have trouble understanding why it's a $XX billion business entity.

Same with successful virtual currencies and assets: they're valuable because of the network effects. Bitcoin is valuable because its users think it's valuable. That's true of any valuable network, and it's true of Bitcoin.

[webmaven]

> A competitor could duplicate everything Instagram does, but the competitor wouldn't be as valuable as Instagram.

You left out IP other than source code, specifically all the User Generated Content they have.

[sowbug]

Doesn't matter. The competitor could have a (legal) real-time mirror of all the UGC, but no users would interact with it -- they'd give their likes and comments to the real Instagram. Nobody would visit the competitor's app to post new UGC, either -- people post on Instagram for the likes and comments.

The value is in the network, not the IP.

[lupire]

Goodwill is an accounting euphism for "losses that haven't been declared yet".

[aqme28]

> Basically what's missing is the ability to even guess at the "true" value of cryptocurrency. There's no P/E ratios to consider because the only thing Crypto "produces" is Crypto transactions. It's also impossible to even guess at a floor or ceiling for the price of a cryptocurrency. The only thing that determines their price is human sentiment - a very fickle input.

Interestingly, this isn't really true anymore. Most of the newer defi currencies represent a portion of ownership in some protocol that is actually returning profits.

E.g. Maker is a lending platform for DAI. You can borrow DAI by depositing other currencies as collateral. The interest you pay to borrow is then converted by Maker into a sort of "stock buyback" against its Maker token.

The Maker token has a P/E ratio, as do many other coins. https://www.tokenterminal.com/

To your point though, the P/E ratio for most of these is denominated in other cryptocurrencies, not in USD.

[DerArzt]

As a layperson who doesn't know a whole lot about investing, this sounds like a ponzi scheme.

The way that I am interpreting this is that if I were to invest in one of these (i.e. Maker) then the returns that I would see are there purely because other people are investing in it.

That is close to what most stocks do, but at least with stocks in a company the value is not driven by the mechanism by which it is traded alone, but also by the decisions and profitability that the stocks are backing.

[aqme28]

> The way that I am interpreting this is that if I were to invest in one of these (i.e. Maker) then the returns that I would see are there purely because other people are investing in it.

That's the opposite of what I'm saying. The returns are from other people using the platform, not from investors in it. For Maker, using the platform means borrowing. For Uniswap, the returns are from a small % fee on trades. It's exactly analogous to a traditional company.

[lupire]

But what is the platform used for? Converting energy into human comfort, or just another layer of financial engineering?

[kravens_last]

> But what is the platform used for? Converting energy into human comfort, or just another layer of financial engineering?

This is essentially the "problem" at heart of all crypto "currencies". There is no real world use case that imparts human value, apart from its utility as a speculative vehicle to grow wealth.

Every new DeFi application is a new layer to lock in current adapters who would've otherwise already cashed out. Crypto as a currency is a concept dead in the water because of the perverse incentives of finding every corner of arbitrage between non distinguishable (and frankly worthless) alt tokens/coins.

The entire world of crypto is nothing else but an experiment of how much one could financialize a fully non-regulated, intangible, and imaginary "good" based on nothing but greed.

[JaimeThompson]

>this sounds like a ponzi scheme.

If it was a ponzi scheme they would be spending millions on advertising and use fear of missing out to get more people to invest.

Wait....

[meragrin_]

> ownership in some protocol

But what is the value of the protocol?

> actually returning profits

Are there actually profits if the protocol is worthless?

[aqme28]

>But what is the value of the protocol?

Wish I knew! Investing would be a lot easier.

> Are there actually profits if the protocol is worthless?

Nope, therefore these protocols are not worthless?

[selestify]

> Price to earnings (P/E) ratio. Calculated by dividing the fully-diluted market cap with the annualized protocol revenue. Shows how a project is valued in relation to its protocol revenue.

That's misleading. Revenue is not earnings. For something like Uniswap, you also have to look at how much of earnings is given to liquidity providers versus spent on token buybacks.

[xadhominemx]

Plus all the revenue is generated from cryptocurrency trading. It’s all circular.

[throwaway4good]

Sure,

For example crypto.com offers 12% pa. on your USD account.

https://crypto.com/eea/earn

P/E just like normal company ...

[aqme28]

What are you talking about? APY on a loan is not P/E.

[lupire]

They are saying that financially, P/E on a stock (really, E/P) you buy is the same as APY on a deposit/loan, since both are the return on invested capital, and you can cash out your principal later.

Oh course their are subtle details that cause volatility and risk of collpase based on how the company/bank/borrower uses the money you put in.

[throwaway4good]

It is a return.

And it is not loan, it is a "stake".

An example of the mumbojumbo obvious fraud that is out there.

It has nothing to do with a company making money by producing useful products or services that has actual real world value.

[MisterBastahrd]

When you stake, you are using your own money to guarantee that transactions on a network will process successfully. If something happens and they don't, you lose that bag.

Staking is just a very stupid loan that you give out without having any real insight into the people who borrowed from you.

[aqme28]

I mostly agree with you, but how does crypto.com's marketing relate to what I was talking about in the parent comment?

[survirtual]

For Bitcoin and other PoW coins, the value is built into the name for minting: Proof of WORK. Less abstractly, today we can think of this as proof of energy consumption / production. In other words, it is sort of crystallizing energy into abstract & transmissible value. By holding a coin, you hold that value / solidified energy.

It takes a certain and increasing amount of energy to generate 1 coin, which binds the value of the coin to physics. This is actually a very good thing, especially given it does not care where the energy comes from. If nuclear, solar, window, hydro, and thermal were our dominant energy sources, it would work in that just as well and without bias. Indeed, it actually has active market incentives to utilize clean and renewable energy sources — something the previous financial mechanisms grossly lack.

Existing banking institutions consume more energy in unmeasurable ways, and they DO care where the energy comes from: oil. They want oil. It’s called the petrodollar for a reason.

[thatjoeoverthr]

Work isn’t value. It’s cost. It’s not crystallized; the capacity to do that work is spent and gone. If you mine and sell a bitcoin, your profit is the revenue -minus- that work.

(Not anti-crypto, just contesting this point.)

[bitxbitxbitcoin]

Good point. I try to identify the work/value that goes behind the USD. All the manhours and energy put into civic duties (military, government, etc). Also largely in the past and similarly uncrystallized, but somehow people find it to be more cyrystalline.

[lupire]

You're right that a lot of waste is miscounted as value -- this is why GDP is not the same as quality of life (even ignoring uneven distribution or logarithmic utility functions.), and part of why "purchasing power parity" and "cost of living" is different in different places.

[ttul]

Except that, in practice, because crypto mining can happen anywhere there is electricity, people exploit weak governments to get their electricity from the cheapest possible source. And to the extent that crypto miners are competing for scarce electricity resources, they increase the cost of electricity for other uses, crowding out, for example, its use for heating and light.

These are not good things.

[ARandumGuy]

> This is actually a very good thing, especially given it does not care where the energy comes from. If nuclear, solar, window, hydro, and thermal were our dominant energy sources, it would work in that just as well and without bias. Indeed, it actually has active market incentives to utilize clean and renewable energy sources — something the previous financial mechanisms grossly lack.

Bitcoin incentivizes mining using the cheapest source of electricity, not the greenest. Bitcoin miners are more then happy to move their mining rigs to places with cheap coal electricity.

The fact of the matter is, we need to not only move to producing more green power, we need to reduce the global power consumption. Green power still has negative environmental impacts, and there's practical limits to the amount of green power we can generate. Crypto mining is actively hindering efforts to reduce global power consumption, by consuming every spare bit of power it can.

Global warming is an existential threat to human civilization, and will likely negatively impact billions of people, if not everyone. Reducing power consumption is not optional. Bitcoin and POW cryptocurrency are making it harder to do that, and that should be enough to oppose them.

[deprave]

So I can pay my utility company $100 a month for energy I consume, or pay $40000 for a bitcoin representing energy someone else consumed? Got it.

[bitxbitxbitcoin]

Yes. How many ways do you have to reliably monetize a portion of that $100 that goes to the utility company, though? At its core, proof of work (not Bitcoin's anymore because of ASICs), allows that.

[lupire]

I dont need to monetize it, I can keep the $100 and not buy the energy. And it's not "reliable" if I get rug pulled (extemely common) or someone else has a more effcient mining setup (extremely common).

Maybe if I'm stuck on inefficient resistive heatong in winter, mining makes sense.

[Scoundreller]

That’s how much it would take to produce another one. Most cost a much smaller fraction of that.

[nightski]

This is just one person's opinion, but even with PE ratios, profitability, or any financial statement you can read determining the value of a company's stock (not the same as the company itself) is almost as hard as bitcoin.

If you can reliably price a stock based on any measure of company value then you could be very rich very fast.

There is a reason they say don't stock pick just buy an index fund and hold.

[mbesto]

> If you can reliably price a stock based on any measure of company value then you could be very rich very fast.

What you're saying is already true and already is happening. The global financial services industry is a $20T industry.

> There is a reason they say don't stock pick just buy an index fund and hold.

Yes for the common retail person sure, but someone has to purchase stocks to put them into an index. Those are professionals who evaluate PE ratios, profitability, and financial statements.

[lowdest]

>Yes for the common retail person sure, but someone has to purchase stocks to put them into an index. Those are professionals who evaluate PE ratios, profitability, and financial statements.

This is not what an index is. You are describing a fund, but an index fund explicitly does not evaluate PE ratios, profitability, and financial statements, they buy everything in the index according to the market cap. Some proprietary indices are privately curated in the way you describe, but in common use the "index" means all of the companies, rather than a curated subset.

[mbesto]

> they buy everything in the index according to the market cap

You're splitting hairs. I guess I should have clarified. What I meant was that at some level the companies are being valued based on PE ratios, etc. So while the index funds may not be analyzing the underlying securities themselves (other than determining their weighted value), someone is, such that their market cap drives them being in the index (SP500 for example). Point still stands from the parent comment.

[willturman]

A share of stock is a fraction of the cash flow of a company. A share represents a tangible thing which can valued according to any number of mechanisms.

Cryptocurrencies represent nothing but transactions and the ledger of those transactions (which they are exceedingly wasteful and clumsy at achieving).

[nightski]

You would be correct if the only thing that drove the price of a stock was current cash flows.

What you are leaving out is growth. Stock prices include expected growth of future profits which by no means is a science.

Not to mention all kinds of other things can affect a stock price such as global macroeconomic conditions, interest rates, etc...

[dataangel]

Satoshi actually had a theory for Bitcoin pricing. He thought it would behave like gold, where over the long run the price converges to the cost of mining it. The cost to run the miners is a floor on the price, because if miners mine unprofitably eventually they go bankrupt.

[SketchySeaBeast]

So, assuming it's around that long, what happens in 2140? Infinite value?

[barnabee]

Miners still receive it from transaction fees, so no. Although the economics of keeping the network secure in the face of no new bitcoin being created and many txns happening in side chains or rollups (or not happening at all) are untested.

[luciusdomitius]

Not really. Historically, no global currency since the Byzantine Solidus (whose practical dominance vaned with the Fourth Crusade in 1200-something) has lasted longer than 80-100 years. So, Bitcoin isn't even trying to do so.

[toss1]

Hmmm, thinking out loud...

That means that the total cost of all the mining divided by the outstanding value of BTC should approximate the floor.

Except when it doesn't. When it becomes unprofitable to mine, all of the miners turn off their machines, and the network dies, it'll go to zero.

Complicating factor is the miners who have free electricity, e.g., setup hooked up to their own solar farm or natgas flare. For them, the cost of mining is the capital investment over their output, so they'd keep their machines running as marginal cost of new energy is essentially zero, but the employees to keep it running? If we're down to very few mining machines running, how quickly does the difficulty scale downwards — fast enough to keep it running?

[atlantas]

To be fair, P/E ratios, financials and stock market regulation didn't prevent this:

$PTON (Peloton) is -77% in the past year

$ZM (Zoom) -67%

$CLOV -82%

$HOOD (Robinhood) -70%

$ROKU -71%

$TWLO (Twilio) -59%

$DOCU (Docusign) -52%

Bitcoin is -28% over the same time period. Ethereum +51%.

[ok123456]

>P/E ratios to consider because the only thing Crypto "produces" is Crypto transactions

The 2008 crash showed that most of those signals are highly manipulated. Bond ratings can be colluded on. Just a few short years later most of the dust settled on that, it happened again with the LIBOR rate. Traditional markets can be systematically manipulated when the fiduciaries don't act in a very fiduciary manner. (It keeps happening!)

[dogman144]

For what it's worth, with an older financial background, the gold standard of P/E ratios were made up at one point as well.

Financial statement analysis and GAAP are much softer indicators than gen pop tends to think. It comes out of a period before behavioral economics took hold, for instance.

> guess at the "true" value of cryptocurrency

How I do it is this:

It's understood today that the Internet fundamentally changed "something" inherent about how we access, interact with and move information. There was a cambrian explosion of availability, and we overtime determined there was some form of "value" to it. It's worth remembering that how to value it had no real peer to compare to in terms of competing information networks - would you price an internet company, or infrastructure like you would a book publishing company or news org? That valuation and how to invest in it broadly took the form of Internet companies, or data-rate charges from infrastructure owners. It's challenging to price the actual data in the network. Arguably, PII/customer data is so valuable because that's easy to price. It's tied to a discrete individual. But for raw information packets, that's more challenging to do for many reasons. So we know this information has value, but we can't easily price it like we can other commodities (1 piece of timber == $$, 1 TCP/IP packet == ?).

Financial transactions are also a form of information. But they didn't experience a correspondingly large boom relative to the full impact on information by the Internet. This is because financial transactions need to be provably discrete, and TCP/IP and related design concepts aren't a good fit for it (yes, packets in transit are discrete, but what I'm referring to goes beyond that). So, we've seen huge explosions of financial activity where it was a simpler financial tx -> internet packet like in heavily digitized financial exchanges, paypal, venmo, and the large uptick in tap-to-pay smart devices. However, we're still entering payment details manually in many payment settings, and the digitization of current finance still ends up requiring a significant amount of manual settlement behind the scenes. This is because it's challenging to prove that "1 digi-buck" is in fact a discrete digi-buck I own and I alone.

So, that's the value that cryptocurrency solved: how to send provably discrete financial data, without relying on a manual, centralized settlement system that's possibly corruptible (what cryptocurrency people would call trustless settlement). It moves the value proposition from the external parties around the internet (ISPs, companies, consumer data) directly into the data transacted, itself. And puts a price on that data.

In my mind, I think of what the Internet did to information, and what cryptocurrency does to financial information, then there's a clear value prop. Edit: the big unknown though is how the tradeoffs between a good-enough service like venmo vs. bitcoin impact user decisions. Digitized finance that's just "good enough" might be good enough for quite a large chunk of the population, and it'll be a long time before we see me paying you for beer in btc.

Hope that helps but also would love to hear counters.

[eric-hu]

Fascinating explanation (though I’m already bullish BTC). No counters but a question: What’s stopping BTC lightning from being the rails you pay a buddy for a beer on?

[dogman144]

- Assuming it's A vs. B platform choices, then network effects: you'll actually have to get users to jump from Venmo, to LighteningMo. Hard stuff if there aren't compelling reasons

- Assuming LN is the infra that the Venmo of 2050 uses: I think you'd need a compelling reason for "Venmo" to drop (edit: or integrate LN into) their underlying infra, which is where I understand Plaid and inside baseball platforms b/t TX processors have very strong holds, and jump over to a blockchain stack.

- The volatility. It has to smooth out. I'm not going to be the next bitcoin pizza guy.

[eric-hu]

I think the second case is most likely. I don’t see crypto displacing any fiat or even financial rail system completely, but just taking a sizable share. I’ve seen very reasonable use cases in Southeast Asia in remittance. Western Union takes a ridiculous cut, and I wouldn’t be surprised if similar use cases are in Africa and South America as well.

[dogman144]

Ya would agree as well, some cross-protocol, side-chain/SWIFT/Plaid/blockchain hybrid except for greenfield areas where it might take off natively.

[dangoor]

> One argument seems to be that cryptocurrency is purely speculative, which is apparently a dirty word. What about the stock market? What about any kind of investment?

I recommend not using the "what about the stock market?" tactic to defend cryptocurrencies. Crypto is more speculative than the stock market because companies have physical assets, ongoing revenue and profits, dividends that they pay out to their shareholders.

[aaaaaaaaata]

> companies have physical assets, ongoing revenue and profits, dividends that they pay out to their shareholders.

Exactly!

If Uber ever shuts down for any reason, they can take all of their vehicles, buildings, gold, and whatever else they own, and evenly distribute them for all shareholders!

[JumpCrisscross]

> they can take all of their vehicles, buildings, gold, and whatever else they own

Uber owns billions of dollars of property, equipment and leases [1]. But your broader point holds. Uber has massive intangible value, which is close to impossible to distribute.

The difference between it and Bitcoin is one can buy Uber, all of Uber, and capture that value. M&A is the ultimate disciplinarian of the stock market, much more so than dividend cash flows. (Though the latter ultimately drives the former.) If you buy every Bitcoin, you destroy it.

[1] https://www.sec.gov/ix?doc=/Archives/edgar/data/1543151/0001...

[SideburnsOfDoom]

That's pretty much what would happen, yes. With the intermediate step of selling those assets.

[mantenpanther]

Bitcoin is anchored in physics and math. And used by millions without western privileges.

[mlac]

Highway infrastructure is also anchored in physics and math. It doesn’t mean we should treat highways like a currency that should be purchased and traded.

Starting a business is open for millions “without western privileges” - and stock is owning a business. Starting a profitable business that adds value (people are willing to pay you for a service) is a lot more useful to society than spinning up another coin that does nothing.

[throwthere]

> Highway infrastructure is also anchored in physics and math. It doesn’t mean we should treat highways like a currency that should be purchased and traded.

Clearly, the world needs highway-based NFTs. Knowing that their ephemeral infrastructure is represented on the blockchain, something that is permanent, will lead to engineers building safer bridges. It will encourage the development of new fields of engineering, perhaps subfields related to structures and others related to materials.

Contrast that to the stock market, where companies sell ownership shares in their businesses tracked in ledgers maintained by western corporations. And some of the underlying businesses have no plans to ever to distribute cash to their stock owners-- look at Berkshire Hathaway! Look at Google! People buy and sell those shares only because the next person will buy them for more. It's a classic speculative investment, not like crypto which is backed by the full faith and power of NVIDIA.

/s. Or is it?

[mantenpanther]

A neutral, permissionless currency adds value.

[CabSauce]

At least until someone creates another one... and another one... and another one.

[aaaaaaaaata]

But there are tens of thousands now.

The real value is in the consensus, which is gotten by having:

Trust (longest chain) Technical security/other intangibles lowering risk Liquidity

Not necessarily in that order for all people.

[cmiles74]

US currency is backed by the government, a mortgage is backed by property. In my opinion, "physics and math" do not provide the same kind of underlying value as a government or real estate.

[aaaaaaaaata]

Then why has no government currency ever been perpetually valuable?

[mlac]

Bitcoin will not be perpetually valuable. No cryptocurrency will be.

Forever is a mighty long time.

[ATsch]

I think you'll find it rather hard to trade the abstract concept of physics and math for some food or shelter.

[SketchySeaBeast]

Just ask Tesla.

[concinds]

Most of the anti-crypto critiques in Silicon Valley bring up these exact arguments: it's speculative, and it enables scams. At its root, it's a hatred of the "get rich quick" aspects of crypto. It evokes the same contempt that old-wealth (people with butlers) have for new-wealth (people with Lamborghinis): that they're childish, didn't earn their privileges, and need to be reined in. It's class signalling.

Thankfully crypto isn't a democracy. Money market funds, banks, stock exchanges, and every other financial institution can be frozen instantaneously by the U.S. President to "prevent another financial collapse". Those who are OK with that much power being concentrated in one person, can continue avoiding crypto. But no amount of public outcry can ban, shut down or criminalize crypto, same as you can't ban IMAP or AES.

[lolinder]

> At its root, it's a hatred of the "get rich quick" aspects of crypto. It evokes the same contempt that old-wealth (people with butlers) have for new-wealth (people with Lamborghinis): that they're childish, didn't earn their privileges, and need to be reined in. It's class signalling.

My hatred of get-rich-quick schemes has nothing to do with class signaling. I hate such schemes because they're almost universally scams designed to siphon money from poor people to someone who already has money. I hate them because I see friends and family spending their entire lives throwing away everything chasing get-rich-quick.

So, yes, that crypto has become a focal point for get-rich-quick is a huge red flag to me, but it's unfair of you to summarily dismiss that concern as snobbish.

[concinds]

I agree that get rich quick schemes are sad, but on the other hand, when I turn off my adblock, 99% of ads I get on YouTube are for copytrading with traditional stocks on eToro. Financially illiterate people get given a rope to hang themselves with crypto, but it doesn't take away from the benefits of crypto, which I think has a (small) place in any portfolio, and could potentially be a lifesaver in any cashless+NIRP society. I wouldn't try to pilot a plane without training, and wouldn't buy any crypto without knowing deeply about it. I don't see it as a red flag of the technology that people do stupid things, just a sign of human laziness (surely, getting the proper knowledge before piloting a plane, trading stocks, or buying crypto is common sense).

There are many people who want governments to "step in" and protect people from themselves, but governments will likely have ulterior motives (KYC, AML, financial control) when they do so.

[mlac]

KYC & AML are useful things that protect customers and prevent people doing things with money that we as a society have deemed unlawful (e.g. tax evasion, drug trafficking, sex trafficking, etc.).

Is giving up the ability to detect those things good?

I wouldn’t use a bank that didn’t care to identify who was withdrawing my money…

[mbesto]

> it's speculative, and it enables scams.

The media sure likes to point to these things, but I personally have more specific criticisms:

- It provides store of value but limited medium of exchange. Until there is widespread adoption of BTC (i.e. people get paid in their salaries with BTC) then you're missing an important half of the definition of a currency

- Wash sales (see NFTs) and price manipulation is rampant.

> Those who are OK with that much power being concentrated in one person, can continue avoiding crypto.

If this statement is true "A minuscule .01% of Bitcoin holders control nearly a third of the supply"[0] then how is this any different? Isn't that worse then the current setup? To me crypto is simply a shift in power from a small number of people to another shift of small people (bureaucrat to technocrats). As the saying goes "new boss, same as the old boss".

> But no amount of public outcry can ban, shut down or criminalize crypto, same as you can't ban IMAP or AES.

Sure, but if you can't use BTC as a medium of exchange then it'll just be that - a speculative asset. So what other utility does it have? KYC (in the US) basically restricts BTC from ever becoming a medium of exchange.

[0] - https://fortune.com/2021/12/20/001-percent-bitcoin-holders-c...

[Mezzie]

I'm pro cryptocurrency (the idea) and anti cryptocurrency (the practice).

> Thankfully crypto isn't a democracy. Money market funds, banks, stock exchanges, and every other financial institution can be frozen instantaneously by the U.S. President to "prevent another financial collapse". Those who are OK with that much power being concentrated in one person, can continue avoiding crypto. But no amount of public outcry can ban, shut down or criminalize crypto, same as you can't ban IMAP or AES.

I find this a funny argument. First of all, there's basically no understanding of civics in it. That's not how it works. The President can't just call up banks and tell them not to give people their own money, or shut down every stock market in the world.

Now you have a point if you're talking about control resting with a small number of people: Those in the highest echelons of finance and government. But on the other hand, this is also a problem with crypto as it is: Because it relies on things most people don't understand (the math and computer science), the people who do understand it have the power. It seems to me this argument is just 'No, we don't want that small group of people in charge; put OUR small group in charge instead.'

If so, be honest and make an argument as to why we should trust you more.

I've worked in politics and done tech and I don't trust either further than I could throw them, and I'm a tiny lady cripple.

Also, you can absolutely ban IMAP or AES, it just requires more effort.

[eric-hu]

> That's not how it works. The President can't just call up banks and tell them not to give people their own money, or shut down every stock market in the world.

Isn’t this what Biden is doing this week with Russian nationals tied to the invasion of Ukraine? I agree with you it’s more complicated than just a phone call, but for the opposing parties they don’t need to think about those details. Those people and companies who will be heavily economically sanctioned—-they’ll be eyeing crypto as a way to sidestep these sanctions.

(And to be clear, I do not agree with Russia is in this situations, but I’m looking at it from a supply/demand perspective. Events such as this are clear demand signals to me.)

[Mezzie]

Yes, but he only can do that to American companies/companies that do business here. He can't tell, say, the Swiss to keep the Russians' money.

There's a difference between "Money market funds, banks, stock exchanges, and every other financial institution can be frozen instantaneously by the U.S. President to 'prevent another financial collapse'" as thread OP mentioned and what you're talking about. I was addressing only systematic action for the sake of averting economic problems, not financial uses of national security power.

For INDIVIDUALS, you're absolutely correct.

Which is why I'm a large proponent of local currencies.

(Trust me, I understand. I'm a very confused Ukranian-American who would like to go back to not being relevant.)

[eric-hu]

Ok thanks for repeating those details of the GP comment. I have to agree with you that some facts in there are fundamentally wrong. The U.S. government can do things to restrict uses of USD but they aren’t _that_ arbitrary.

[pjc50]

> But no amount of public outcry can ban, shut down or criminalize crypto, same as you can't ban IMAP or AES.

This is a terrible example as the US government really did ban DES for a while - at least for "export", which includes publishing on the internet.

People who say "the government can't ban X" are really badly underestimating how far governments are willing to go if you really do start disrupting the state.

[concinds]

Yes, governments can try, but there will always be ways to fight it; including using sneakernet to exchange hardware wallets, instead of traceable on-blockchain transactions. Crypto is as impossible to ban as the internet at this point.

[pjc50]

You end up in a "war on drugs" scenario. You could argue whether it is "possible" or "impossible" to ban drugs, given their continued availability, but they certainly have been criminalized.

[dataangel]

Yeah and how effective was that ban? Not very, and if it were tried today it would be totally impotent.

[mistrial9]

California - ground zero for "new wealth" .. no, people do not buy Lamborghini's here.. that is for Miami, Eastern Europeans in Moscow or London, Chinese at Yahoo years ago, or maybe teenage'like guys around New York or Chicago. Here, people like the readers on this site, amass seven figures, and cannot buy a decent house because it is not for sale, and it is too expensive for someone with seven figures of savings. Second, old wealth, zero people have butlers. It does not exist here. But they do have large houses, extensive financial investments including Warren Buffet's stock. A good percentage of wealthy people here do not have children, and therefore grand-children, and among those that do (Catholics etc) the wealthy older people talk non-stop about how to keep the grandchildren out of the money, away from the house, and constant concern for being in a law-suit against a close relative that wants to do any of that.

Unfortunately, reality is complicated and stereotypes die every day. In California I believe we are seeing in real time, a lock up of the system of value (money) where the assets are so large, and so immoveable, compared to what people "earn" by working in a job, that there are strange bucklings visible on the street. With Coinbase founders living within three miles of this place here, I agree, there is no stopping this in reality. Big thieves hate little thieves, and it is no secret that the Federal Reserve itself is making a cryptocurrency, with centralized transaction tracking - it was announced here!

sorry - I forgot, Lambos in Los Angeles, definitely. Angelinos have always been like that, it is part of the scene. So I am talking "not LA California" perhaps.. my bad!

[bluGill]

The government can criminalize crypto. Investigation wouldn't be easy, but the FBI and other equivalents (depending on your country) are very good at investigating hard to solve crimes, and if given the budget can track you down in various ways. (tax fraud is often a big one - even if they can't prove you are in crypto they can prove you didn't pay tax on something)

[spaceisballer]

I for one am surprised by the negative sentiment only because the tech industry seems to be all about it. I don’t see the problem it is trying to fix. Crypto by is terrible as a currency, transactions are slow and damn can they cost a lot. And the currency itself fluctuates a lot. It’s not really decentralized, it’s not really anonymous and it can be manipulated. There seems to be no end to people hyping crypto and NFTs, because if I get you to buy in my money may go up. But what exactly am I buying? Sounds like you just need a sucker and I may or may not make money, but since you made up this currency and a small number of people own the lion’s share I guess you all get rich. My take is that the tech industry has just created a new way to become even richer by making some confusing product to prey off everyone. Maybe that wasn’t the initial plan but it sure looks like that’s how it’s shaking out.

[tomc1985]

> I for one am surprised by the negative sentiment only because the tech industry seems to be all about it.

Between the prevailing trend of rent-seeking subscriptions and shoving NFTs/blockchain into anything that some knucklehead thinks it will fit in, tech is very much becoming grift culture as the nerds get run over by sharks, business types, and crypto bros

[convolvatron]

that trend started 30 years ago

[tomc1985]

The running-over bit, sure, but I feel like this neofintech stuff is enabling a whole new cohort of grifters

[blaser-waffle]

The difference is they're so much better at it now.

Social media allows for efficient targeting, and even if you know how marketing works it will work on you eventually.

[bluGill]

There are different types of speculative investments.

Stocks are backed by the company they are behind, when the company goes out of business the stocks stop trading. When you own stocks you vote on company leadership (or at least should). When the company makes money they pay you cash as a dividend (for tax reasons this most often comes in the form of a stock buy back making your stock more valuable. As such stock speculation on the company not stocks in general.

Historically money was backed by gold, and supply and demand of gold is what governed the price. Today cash is not, and it is only backed by the government saying you have to use it. As such cash is more speculative than stocks, but the government forcing you to use it means it has some power behind it. Bitcoin is backed by some governments, so bitcoin is speculation on those governments (this is new in the past few years and makes bitcoin somewhat less speculative than other crypto)

I don't see the point of crypto in the end. Almost everything it can do is better done by a secure central database, and the rest is a niche that can be handled by physical cash, or a contract (ie check) that is reconciled with the database later. Sure you could use cyrpto, but the energy costs are so much larger that I don't think we as a society can afford to use it.

[logifail]

> When the company makes money they pay you cash as a dividend (for tax reasons this most often comes in the form of a stock buy back [...])

Often?

"Nearly 75% of the stocks in the S&P 500 pay a dividend, and the dividend for most of them exceeds the yield on U.S. 10-year Treasury bonds (currently around 2%)"[0]

[0] https://cabotwealth.com/daily/dividend-stocks/highest-paying...

[bluGill]

Even companies that pay a dividend buy back stocks.

[zhdc1]

> I’m blown away by how anti-crypto this discussion is. I hadn’t realized how negative the prevailing sentiment is on Hacker News.

The more I learn about crypto (which isn't a lot), the more I agree that digital currency is the way ahead.

I'm not convinced that decentralized ledger-based crypto is going to win out in the long term. Let's be honest, is there any coin at the moment that you would trust as a stable store of value and not a speculative investment? Fiat currency goes down in value over time, but most central banks are good enough at keeping the rate of loss relatively constant. Most, although not all, coins are also less than ideal for conducting transactions. There's also a regulatory aspect that, for some reason, is generally discounted by advocates.

However, I could definitely see something like GNU Taler gaining widespread adoption, especially if central banks make good on releasing digital currency. There's no reason for consumers or merchants to pay anything more than absolutely minimal transaction fees on purchases. There's also no reason that electronic payments or transfers can't post in near real time.

[aaronsimpson]

Even if the future of decentralized ledger cryptocurrency isn't bright, accelerating adoption of digital currencies is a good step forward. If that's all crypto ever accomplishes, I think it'll be a success. Some of course have concerns about privacy, tracking, etc., but the speed of payment rails in our current system is ridiculous given the technology we have.

[saul_goodman]

I somewhat agree with your sentiment: the outcome is sort of the same but for different reasons.

> "but most central banks are good enough at keeping the rate of loss relatively constant"

The past two years clearly demonstrated central banks deliberately set the rate of annual inflation to a desired level in a much more directed way than anyone realized. At least for business as usual economies. Once you see inflation as a tax it starts to make more sense. But the end result is a "mostly" responsible entity in control of the inflation rate, so the sentiment is same: traditional fiat currencies will be more stable for a while to come, maby forever (when compared to crypto).

> "I'm not convinced that decentralized ledger-based crypto is going to win out in the long term"

Blockchain was designed to surpass the problems the pre-Bitcoin E-gold service hit: the government can always smite you by raiding your office and taking the servers. That's the sole problem Blockchain solves, nothing more. In that sense it's already proven itself as a successful technology. Otherwise, if you're a government-sanctioned entity there's no need to fool with Blockchain when rolling a CBDC: your main physical risks are terrorists and natural disasters, not smiting by a police raid.

> "especially if central banks make good on releasing digital currency"

It's coming, but it's not what people want it to be. The Fed is saying "we're not trying to kill off cash" while putting out open calls to investigate all the things they need to do in order to kill off cash. Another issue here that I don't see being talked about is that the very nature of stable-coins exposes these assets to the inflation rate that the asset is pegged to. This means it's getting taxed, and so it makes sense for the Fed to want to get into the crypto world from that standpoint.

https://www.federalreserve.gov/publications/files/money-and-... https://www.federalreserve.gov/econres/ifdp/files/ifdp1334.p...

The major danger with CBDC is that this is going to be used along with social credit scores. We just saw Canada lock bank accounts of anyone who donated to the trucker protest. These people are f#$%ed. Now imagine if they were locked out of using cash as well - even that emergency stash under the couch cushion would be useless to buy food. It's a nightmare situation and it's coming sooner than later. But again, governments and central banks don't need this level of power, governments have proven they will seize bank accounts of those they disagree with. But cash still allows people to move around these barriers. Once CBDC's roll out it's a very bleak outlook.

https://www.youtube.com/watch?v=rpNnTuK5JJU https://www.coindesk.com/policy/2021/12/30/mexico-plans-to-i...

[Blackstone4]

>One argument seems to be that cryptocurrency is purely speculative, which is apparently a dirty word. What about the stock market? What about any kind of investment? If you truly believe that cryptocurrency is the basis for a superior economic system, isn’t it rational and wise to put some of your savings there?

I feel like it is a black and white and naive view to categorize every financial instrument as purely speculative. They exist along a spectrum ranging from on one hand, sound investments (i.e. US treasuries), all the way to more speculative plays like sports betting. Where an asset sits on the spectrum is a subjective to the eye of the beholder but concensus among investors at this time would probably place US treasuries, blue chip corporate bonds, US stocks in the sound investment half and crypto in the more speculative half. In part because new technology which makes some wary and in part because crypto is a form of currency where most participants appear to be 'investing' on the basis they can sell it to someone else at a higher price. Which sounds fine but normally stocks or US treasuries are underpinned by interest payments, dividends or promise of future dividends through earnings growth whereas most crypto does not have an of these characteristics.

I am blown away by the number of people claiming to be knowledgeable crypto investors who are dismissive of other investment types as speculative when they themselves appears to have little to no knowledge of the history of investing and why things are the way they have been.

[chrisseaton]

> If you truly believe that cryptocurrency is the basis for a superior economic system, isn’t it rational and wise to put some of your savings there?

Presumably the people you’re talking about don’t think that, so no it wouldn’t be rational for them.

[afpx]

Bitcoin was some neat tech. But, in case you haven’t noticed it’s been taken over by finance bros. Now, it’s just a scam to prey on the poor and ignorant.

[johndevor]

Wait until you hear about fiat currencies.

[l-lousy]

I think that’s the argument, why move to a whole new currency if it’s more of the same problems with fewer safeguards for the non technical and no way to get lost items back?

[aaaaaaaaata]

Why would the poor have wanted to switch to the Internet?

After all, it required expensive custom hardware, and know-how.

What changed?

Have you considered it's just really early days?

[acdha]

> Why would the poor have wanted to switch to the Internet?

Look at the history and this is easily answered: it let them do things better/easier/cheaper. That could be shopping, accessing government services, dealing with companies, finding a job, seeking educational material, entertainment, dating, connecting with friends and family (email was a pretty sweet alternative to long distance phone calls), etc. The internet picked up sharply as computers came down in price and people tried even cheaper options like WebTV because there was so much demand, and that started happening very quickly.

In contrast, cryptocurrency had much lower barriers to entry but despite having at least twice as many years by that point it has very little non-speculative usage because it doesn’t do anything most people care about. Even being a cheaper PayPal/Venmo would be an improvement.

[Hoasi]

> Have you considered it's just really early days?

How many years do early days last?

[aaaaaaaaata]

Well, once again, using the Internet as a very easy to reach example....decades?

[floodyberry-]

"really early days" is an argument that a lot more work is needed, not that everyone should go all in knowing there is going to be a lot of collateral damage along the way even _if_ it works out.

[lr4444lr]

You can pay your taxes, fines, and court ordered debts with fiat currency. It's arguably THE MOST stable thing in a functioning society above pure barter.

[danuker]

Try saving for retirement. At 2% inflation (the target rate), after 20 years you'd lose 1 - (.98 ^ 20) = 33.2% of the purchasing power of your savings.

But right now, inflation is 7.5% year-over-year. And that's the official measure, which uses "owners' equivalent rent" based on a survey, instead of actual rent prices.

In the past 20 years (Jan 2002 - Jan 2022), the CPI went from 177.7 to 281.933, or a 58.6% increase. This means a 2.3% average inflation rate.

https://tradingeconomics.com/united-states/inflation-cpi

https://www.investopedia.com/terms/o/owners-equivalent-rent....

[vel0city]

> Try saving for retirement. At 2% inflation (the target rate), after 20 years you'd lose 1 - (.98 ^ 20) = 33.2% of the purchasing power of your savings.

People shouldn't be holding dollars for retirement. People should be investing in productive assets. Its not good to have society's wealth locked up in paper notes or shiny metals hidden under a mattress or buried in the backyard.

[Spoom]

This implies that your retirement savings are in cash, which is inaccurate for most folks. And certainly, I'd rather have it invested in the stock market than the wild fluctuations of the crypto market, especially with its uncertain withdrawal ability and complete inability to recover if someone steals it (which is, again, typically much easier with crypto than a brokerage).

[danuker]

The previous comment said cash is stable. I was illustrating that it is stably losing value.

[UncleMeat]

Most people don't save for retirement by storing stacks of cash.

[tbirdz]

Then buy I-Bonds

[johndevor]

> It's arguably THE MOST stable thing in a functioning society above pure barter.

Fiat currencies crash all the time. I believe the latest to collapse was Lebanon's currency.

[UncleMeat]

New things aren't always better.

Yes, existing financial systems are terrible. They are rampant with abuse, manipulation, and people converting human behavior into abstract objects that they can gamble on so that they can extract wealth without providing value and they do this to the point that they introduce systemic risk to our entire society.

Cryptocurrency is this times 1000. It is the financialization of everything. Instead of mortgages being packaged up into bonds and then derivatives of those bonds, everything gets packaged up into financial instruments and then derivatives of those instruments. Something like ETH makes it very easy to write programs that move tokens that are worth dollars based on inputs taken from the ledger itself. That inevitably encourages a sort of hyper-financial system.

That's worse.

[lawn]

Yes, most of the loud discussion is by crypto bros that want to get rich and don't care and don't understand the technology.

I understand that the negative sentiment is a counter-reaction to the crypto bros, but a little more nuance would be welcome.

[danuker]

How is it a scam? Does it not still offer the same tech? In fact, with Lightning, even more advanced tech.

[unstatusthequo]

Agree with you on all of that. The general HN sentiment towards cryptocurrency is so acutely negative. I generally don’t even bother clicking links related to it because of this issue. Its just asking for whiny diatribes about how crypto sucks and will ruin everything. It’s ironic to me how freedom loving HN can be, until it is finance related and threatening governments and banks but empowering the masses. Seems bizarre to me.

I’ll exit before the “uses too much energy” dissertations enter. I bet your stacks of bare metal severs and electric cars and hairdryers and ovens and water furnaces and electric heaters and gaming machines and four monitor dev setups are super green. Could crypto be better at using less energy? Probably. Could those other things? Yep. Is progress on efficiency being made? Well, yes, at least crypto is trying to do so with PoS etc. can’t say the same for your heavy old appliances.

[spaceisballer]

So all the things you have listed consuming energy have uses. They are doing something. Can they be more efficient, sure. What exactly is crypto doing? What is it solving? The crypto industry keeps growing and consuming video cards, processors and energy. To do what? So if it’s a currency it’s not even close to the efficiency and speed of the current financial system. Ease of use too, not even close. People are making money though, so I guess we don’t question it?

[JumpCrisscross]

> Banks will be hurt by crypto

Anyone saying this is talking bollocks. Wall Street hasn’t seen a bonanza like crypto since ‘06. Hedge funds are having their best fundraising years since the 80s, largely on the back of crypto-related trading.

The best balance I can come up for crypto is to mandate KYC at all on and off ramps, tax its trading like the luxury good it is (maybe using the proceeds to fund law enforcement around scams) and ban or surtax mining using American power sources. (Let others spike their power prices and pay us for it.)

[ramesh31]

>The best balance I can come up for crypto is to mandate KYC at all on and off ramps

That would drive the value basically to zero, since the entirety of all crypto market caps are based on their ability to facilitate digital crimes.

[JumpCrisscross]

One, KYC in America does nothing for the rest of the world. Two, we know that’s not true. The aforementioned hedge funds could keep the flywheel going on their own.

[ramesh31]

You're implying that the hedge funds aren't involved solely to get a piece of the racket

[Karunamon]

Do you have a single fact to back up this extraordinary claim?

[ramesh31]

>Do you have a single fact to back up this extraordinary claim?

Name one single use of Bitcoin that legitimizes the trillion dollar market cap, and that fiat currency doesn't provide in a safer, more legitimate way. The "sneaking across the border with my life savings" scenario doesn't count. That has nothing to do with the current market cap of Bitcoin.

[Karunamon]

Taking that as a 'no', then. Please back your own claims.

[JumpCrisscross]

> Do you have a single fact to back up this extraordinary claim?

Which claim?

[joshjdr]

“Purely speculative” is what makes it more akin to gambling than investing in income generating assets.

[PretzelPirate]

Crypto can be an income-generating asset just like any stock that pays dividends. You can use lending protocols or act as a liquidity provider and, in many cases, have your income earned in a stable coin (such as USDC).

[pjc50]

Hilariously, crypto has reinvented fractional reserve banking. "Staking" is just traditional fixed-duration lending, but with some weird caveats and liquidation rules borrowed from margin trading that you need to read carefully.

[cuteboy19]

Most importantly, it has no real guarantee. There is no reason why our beloved Tether inc can't just vanish from its Cayman Islands headquarters one day

[kube-system]

> Another argument is that crypto enables ransomware attacks.

Whether or not you have a positive opinion of cryptocurrencies, this is factual. In order to successfully demand a ransom, you must have a way to get paid. For ransomware, you need something you can do remotely around the world, and something that can’t be blocked or reversed by the authorities. Cryptocurrencies were the first solution for this.

[ramesh31]

>I’m blown away by how anti-crypto this discussion is. I hadn’t realized how negative the prevailing sentiment is on Hacker News.

There was a dream that was crypto once upon a time. It is now exclusively the domain of organized crime, grifters, and every imaginable permutation of ne'er-do-well you can possibly scrape up on the web. The entire space sickens and disappoints me.

[tastyfreeze]

All of those things exist with anything that is easily exchangeable and valuable. I am confident there are more people using crypto for legitimate purposes than there are scammers. I would question why examples of ne'er-do-wells in crypto is all you hear about.

[JaimeThompson]

Crypto isn't about getting rid of middle men, it is about putting new ones in their place with much less consumer protections for those who are harmed by the actions of those middlemen.

[jcranmer]

> One argument seems to be that cryptocurrency is purely speculative, which is apparently a dirty word. What about the stock market? What about any kind of investment? If you truly believe that cryptocurrency is the basis for a superior economic system, isn’t it rational and wise to put some of your savings there?

So the thing about investments is that they are a transaction that gives you a share of property in exchange for a share of the future income stream, albeit this mechanism is often imperfect and valuation may not so directly correspond to the current value of the underlying property or income stream. Even if many people are buying investments solely with the intention of selling them to somebody else for the higher price, the reason to gamble and expect the price to go higher is because of the valuation of the property. Even the miserly interest you get from parking cash in a bank account is tied to the income the bank makes from using the money you so parked.

But with Bitcoin, when you buy a bitcoin, you get a share of... well, nothing. And the way you make money with that share of nothing is to sell it to somebody else for a higher value. That's the only way to make money: you can't make money except by enticing new entrants, which is literally the definition of Ponzi scheme. And other investments aren't Ponzi schemes because there are other ways to make money from the investment, even if they aren't necessarily the most common way of making money.

This doesn't necessarily hold true for all cryptocurrencies; I'll concede that I'm not a connoisseur of the cryptocurrency community. But it feels to me like it's the standard tech-bro "X, but unregulated", except "X" here is finance, an industry which is famous for its unregulated elements not only resulting in lots of people losing all of their money but also bringing the economy down with it. So forgive me if I'm not exactly enthusiastic here.

[thrwyoilarticle]

>What about the stock market? What about any kind of investment?

You mean the kind that pay dividends?

[pjc50]

Before a stupid argument breaks out, everyone please note that a stock buyback is basically equivalent to a dividend with a different tax treatment; both are returning money to investors.

It's also theoretically possible for some of the crypto-token-organisation things to pay dividends, but it's far more common for them to simply take the money and run. Because a token is not a legal framework like a company is.

[danuker]

There are companies paying dividends, and companies reinvesting profit. What difference does it make?

[aaaaaaaaata]

You mean payments/yield from staking?

[PretzelPirate]

What percentage of stocks pay dividends?

[mlac]

I don’t have a percentage, but here are 25 to start with:

https://www.nerdwallet.com/article/investing/how-to-invest-d...

[Isamu]

> I hadn’t realized how negative the prevailing sentiment is on Hacker News.

I think cryptocurrency is polarizing. While the technology is interesting, the current landscape of related businesses is discouraging.

> One argument seems to be that cryptocurrency is purely speculative

With stock you get part ownership. Buying gold relies on the inherent demand for and usefulness of gold as a metal.

Cryptocurrency is like exchanging your country’s paper money for other paper money that is hard to counterfeit but is not backed by any country. It might be okay if your country’s money is crap.

[bombcar]

Even assuming that crypto currency does provide value and wins out in the end - why would it be any of the existing ones as opposed to a new one started by the right players?

[BobbyJo]

> If you truly believe that cryptocurrency is the basis for a superior economic system

This is the reason for the prevailing negative sentiment though. "Postgres will revolutionize the economy! Put all your money in unique keys!" Sounds crazy right?

I mean, it might not be wrong, we all trade assets using special government cotton, but it is still a wild thing to hear as a software engineer, and an even wilder thing to see people bet their life savings on.

[cors-fls]

> Another argument is that crypto enables ransomware attacks. This to me sounds akin to saying “encryption enables child exploitation”. I.e. it focuses on one abhorrent element of society that would take place no matter what and blames its existence on a system which has great potential for good, a kind of propagandist thinking.

You are biased too. How about comparing "crypto enables ransomware" to "unregulated gun sales enable mass shootings" ? Most western countries have regulated gun sales to avoid mass shootings, it works and the people sees this as a positive thing.

OK, it's controversial so replace "gun" with something else that is forbidden in the US for the greater good.

Compared to "guns for everyone", encryption has a lot of usages that are necessary (and beneficial). That's why banning encryption on the pretense of child exploitation is a mistake.

What does crypto bring to the table that is as necessary and beneficial as encryption ? Is it more like encryption or more like guns ?

On the other hand you also have to compare the bad side : is enabling ransomware as bad as enabling child exploitation or mass shootings ? (certainly not).

[ideamotor]

You want to trade a system that has decayed with a system that is deliberately rotten. Banks and securities are regulated, have some limited democratic governance, and crypto is designed to not have these things. That’s definitely propagandist thinking, mixed with a cherry picking and a dash of confirmation bias. What’s shocking is that people share your views in good faith.

[exdsq]

I actually got so stressed defending Crypto because a lot of the attacks get very personal (all people working on it are scammers, I’d never hire someone with web3 on their cv, etc). I kind of wish @dang would add a new rule regarding crypto because it’s always the same conversation but does hurt those working in the field on HN earnestly.

Edit: Even this gets downvoted lol

[SamoyedFurFluff]

One of my concerns about cryptocurrency is the potential for the lack of regulation to allow for scammers, pyramid and pump&dump scemes, etc. I’ve heard of more than one undereducated immigrant family having life savings absolutely devastated due to this in a way that one would at least have case law and existing recourse if this happened in a traditional structure.

Additionally I doubt that cryptocurrency is disrupting wealth inequality. The major participants were all wealthy to begin and all of the increased interest seems to circle around the most wealthy… so it actually just contributes to wealth inequality. (In the documentary there is even apparently an mmo that people play to earn cryptocurrency tokens that goes into the wallet of an employer who then pays them a wage, with performance reviews and firings. Idk this looks to me only of recreating the same wage slavery and wealth grift that the original money system has.)

[throwaway4good]

It has become more and more obvious that cryptocurrency, like the gold as sound money movement before it, has a strong political side and is deep in bed with the alternative right.

I think that explains part of the strong hn reaction to it.

The other side is software architecture of it, where crazy resources are spent making some parts decentralized, while other parts are centralized and ignore, creating a broken, overcomplex beast.

[wintermutestwin]

Here's another couple arguments for you:

1. Crypto's primary use today seems to be money laundering and other unsavory "darknet-ish" things. It seems like it would be an unnecessary risk to associate your financial persona with such illicit activities.

2. When markets tanked due to Coivd, crypto went right down with it.

[Lordarminius]

Most HN readers work for Web2 companies and are invested in the past. Nothing to see here

[throwthere]

What's weird is I don't see any anti-crypto comments except in reply to your anti-anti thoughts. The arguments you're stating seem mostly straw-men to me.

Some people get very very excited about crypto and kind of overly sensitive to discourse. I think some of that is early-adopter fervor.

Some of it, too, could be the understanding that the more adoption it gets the better the party is. The higher coin-caps go, the more respect, legitimacy and outside resources they command.

Take stocks on the other hand. If you tell me the stocks I'm buying are worthless-- that's good for me! It means you're not buying and driving the prices up when I buy and better prices when the businesses repurchase shares. So maybe that's partly why I don't care when people disparage stock ownership.

Point is, sometimes I wish labels like "pro-" or "anti-" crypto fell out of use-- it's a complex topic and most thoughtful people have more nuanced views.

[nonameiguess]

So, there may be more, but there are at least four types of goods one might hold:

* Consumer/durable goods meant to be used - i.e. dishwashers, houses you live in, furniture

* Appreciating assets meant to grow long-term wealth - i.e. ownership shares in productive companies expected to last a while and earn profits, houses you rent to others, land itself

* Bets and hedges - i.e. insurance policies, credit default swaps, futures contracts, the Bengals at +3500 or whatever

* A medium of exchange - some highly liquid, low fee, stable-valued token meant to be held temporarily to eliminate the need for either direct barter or trust in delayed-delivery transactions

Cryptocurrency just needs to get its story straight on which of these it is. Clearly a good can cross categories. People make bets in foreign exchange markets for currencies, as well as hedges when they actually do business internationally. Even owner-occupied housing can be seen as a strategy to grow intergenerational wealth. Beanie babies and baseball cards are consumer goods that may or may not over some limited period of time see dramatic increases in dollar-denominated value.

But fundamentally, you don't want a medium of exchange to cross over into other categories, at least not often. Rapidly decreasing value causes panic and social collapse. Rapidly increasing value encourages holding rather than spending, which brings the productive economy to a halt. Even just having direct use value may do that. You don't want collectible stamps or commemorative silver coins to be a primary medium of exchange because many holders will not want to exchange them, and same problem, the trade of real goods grinds to a halt.

Cryptocurrencies seemed to start off as a basically sound idea. Hashcash and proof of work were originally developed as anti-spam, anti-DoS measures. Make a client prove it did a bunch of useless work before it can send a request or message, as a natural rate-limiter. Satoshi came along and realized the tokens generated by this useless work have some level of fundamental value, and when traded on a blockchain, can allow for trustless transactions without the need for a single authority. All fine. But as soon as it got pulled almost entirely into the realm of speculators whose primary aim is to increase the dollar-denominated value of the tokens, it lost any potential to replace normal currency.

I don't think there is anything inherently bad or immoral about people sending each other what amounts to gigantic piles of dirt proving they have the strongest automated digging machine and convincing others who have a lot of cash that buying the dirt piles is a better wealth growing strategy than buying companies and land and other traditional investments, but it isn't exactly the revolution we were promised.

[magicjosh]

Anti-crypto HN is real!

I still have not found the HN-like community that gets cryptocurrencies. Maybe it's just being created today. People say Twitter but it's still pretty meme oriented. /r/ethfinance is ok but not enough content. Zero Knowledge podcast is solid but podcasts are one way communication. And the forums for cryotocurrency developers are beyond my level of tech knowledge.

I wonder if at some point anthropologists will even study "tech's rejection of crypto" as a rift that became something more.

[xadhominemx]

Oh, we “get” crypto. What we also “get”, and what crypto people don’t, are the systems crypto is trying to replace and why the aspects crypto people think are flaws (centralization, arbitration, ability to reverse transactions) are all features

[aaaaaaaaata]

> (centralization, arbitration, ability to reverse transactions) are all features

Don't sweat, this will all take place on Layer 2.

[aaaaaaaaata]

Ethereum Magicians

[pibechorro]

Dont underestimate people bitter they missed out on early adoption and also paid shills.

[rgrieselhuber]

I've noticed a correlation in attitudes between strong buy-in to establishment narratives on almost any topic and a rather overt hostility toward any challengers to fiat monetary systems.

[rgrieselhuber]

As the downvotes illustrate perfectly. The shared characteristic in both points is the presupposition that coercion is an acceptable foundation for building systems.