[mkdirp]

Cryptocurrencies have never claimed they address the hardest parts of financial inclusion. Cryptocurrencies solve the issue of trust.

> We need to keep track of our customers’ account balances.

Right. That's what the blockchain is able to do. It can assert that you, who says you have 1 bitcoin in your wallet, actually really have 1 bitcoin in your wallet (assuming no attack vectors such as 51% attack).

> We need them to trust that their Wave balance is correct and Wave won’t lose the money.

This is the same argument as above.

> We need to comply with relevant regulations—know-your-customer laws, capitalization requirements, account limits, etc.

Not something cryptocurrencies have claimed they can solve.

> We need to provide an easy way for users to exchange their balance for cash and vice versa.

This is an implementation detail, and entirely depends on how the UX of the wallet is. Sure running a CLI tool and GUI that looks like it's from 2008 (at least it was last time I looked at bitcoin's GUI) isn't great UX, but you can build a different GUI for it. Something plenty of exchanges have already done.

> Of course, the above aren’t the main use cases of cryptocurrency today: those are speculation, theft, extortion, more theft, drugs, even more theft, and speeding up climate change. It remains to be seen whether legitimate, productive uses of cryptocurrency will ever justify the hype. We hope so!

There it is. This is just an article blindly bashing cryptocurrencies. I implore you to ask yourself, what has previously been used to do all the above? That's right. Fiat currencies such as the GBP, USD, and other currencies.

I may possibly be biased, because, I certainly believe cryptocurrency has its place, though I don't believe it will replace fiat. But this article is just unnecessary fear mongering with zero merit.

[unholiness]

The strawman this blog post argues against, who claims part of the upside of crypto is that it will help the unbanked and underbanked soon join the world economy... definitely exists. In large numbers.

It's a naive view, but a common one. It deserves the counter-argument it's getting.

[Retric]

Trust is the biggest issue with cryptocurrency. I can trust my bank + the government to keep my money safe. As has been repeatedly demonstrated, I can’t trust an exchange and keeping your own wallet is extremely risky.

[bb88]

I can't trust stable coins.

I can't trust the price of BTC to drop to $0 when speculators panic.

I can't trust that my BTC will be accepted if it was once tied to a money laundering (mixer) address.

I can't trust that I will not be rug pulled on any new coin unless I read the fine grained software contract, first.

I can't trust a software contract from being hacked unless I can hire a software contract expert to peruse it, and hope he's ethical, and won't exploit any holes in the contract for his own gain.

[...]

[everfree]

> I can't trust stable coins.

Why not?

[tablespoon]

IIRC, some widespread and notable ones have consistently failed to prove they're backed by the reserves they claim to have.

[everfree]

That's true, but it's silly to measure the viability of a whole class of financial instrument by its weakest and shadiest actor (Tether).

There are plenty of reputable stablecoins out there that prove their reserves either continuously on-chain or through regular financial audits.

[bb88]

>... but it's silly to measure the viability of a whole class of financial instrument by it's weakest and shadiest actor.

Tether is the weakest actor? What reality are you living in? It has 90% of all stable coin trading volume.

I think it's silly to make arguments which are falsified by a simple google query.

https://coinmarketcap.com/view/stablecoin/

[Forgeties79]

Every time I look under the hood of tether I shudder a bit.

[bb88]

"Reputational Risk" is a term bandied about in the banking industry when it comes to holding people's money.

While USDC does indeed look better, the management failure of holding corporate bonds in lieu of treasuries and dollars would have triggered an audit in a bank, and would have been big news.

https://www.bloomberg.com/news/features/2021-10-07/crypto-my...

https://markets.businessinsider.com/news/currencies/coinbase...

[slyzmud]

> I can trust my bank + the government to keep my money safe.

That's not true everywhere. I live in Argentina and people prefer to have dollars in cash in their houses rather than leaving them in a bank. A few years ago, in 2001, the government took the dollars from the banks and gave them pesos for a lower value. Most banks went broke and people lost their savings and the ones that didn't, gave pesos to people making them lose 75% of their savings. I know similar things happened in other countries too.

Crypto kind of solves that issue. I know some people who prefer to save in DAIs than keep dollars in the bank.

[TekMol]

Which country do you live in? My Government abused my trust big time. Over the last 10 years, it doubled the amount of money. And thereby halved my stake in the countries buying power.

And regarding trusting a bank: In my country there was a bank with a $15B market cap that did not really posess the money they claimed they posses.

[bb88]

Then: "BTC cause money printer go brrrr"

Now: "Tether printer go brrrr and we still shill crypto"

[ilammy]

> I can trust my bank + the government to keep my money safe.

Trust them to keep your money – yes, you can absolutely rely on that.

Trust them to have “your” money back – that’s a taller order. But it it will be safe, sure.

At least with cryptocurrency you don’t have to keep it at an exchange, while the governments are pushing for abolishing cash and keeping all the money in banks.

[nonamenoslogan]

I don't know where this idea that governments want to abolish cash comes from. The crypto-world loves to bandy this about, but in reality a HUGE portion of the people still transact constantly in cash. Granted in the US only about 10-15% of people are "cash-only," but 85-90% use cash daily. Cash isn't going anywhere anytime soon, no matter how great Starlink gets, no matter how much Illuminati-conspiracy the Internet dreams up, electronic only money is a pipe dream in the foreseeable future. Maybe in another 50-100 years? Who knows.

[randomhodler84]

The dollar lost 99% of its value in the last 100 years. Eventually folks will wake up and not want to earn or accept money that melts away so quickly. It should take a lot less than 50y at the rate of print.

[ClumsyPilot]

"can trust my bank... I can’t trust an exchange"

We could make them one and the same thing with a stroke of legislative pen. Just because current laws do not manage X new thing correctly, we should not conclude X new thing is terrible.

[kkfx]

And that's the most important thing crypto enthusiast always deny or fail to comprehend, it's like famous https://xkcd.com/538/ most enthusiasts do not accept that the blockchain will became unmanageable by most just due to it's ever-growing size. At that point exchange will be mandatory by nature and at that point users will have no more viable means to verify anything.

The very same old scam banks have made in the '300 invented bank notes to be exchanged instead of gold...

And probably that is the real reason behind crypto: some Bug&Powerful in the IT decide that's about time to kick out banks substituting them with something that's the same but in other hands and safer for the real master, BTW It's not just me saying that but also the Geneva Report 2019 "Banking Disrupted?" [1]. Unfortunately I fear most will not understand in time and actual IT "pseudo-free but still some freedom is possible" will be long gone...

[1] https://voxeu.org/content/banking-disrupted-financial-interm...

perhaps to be skim-read together with more recent

https://asiatimes.com/2021/05/beijing-prods-millennials-to-d...

https://voxeu.org/article/digitalisation-and-future-banking

and countless others

[everfree]

> most enthusiasts do not accept that the blockchain will became unmanageable by most just due to it's ever-growing size

Some blockchain protocols like Bitcoin make the silly argument that in order for a chain to be worthwhile, a full history of all transactions needs to be maximally available on the network.

Other chains either drop, or plan to drop data that's been on the network for over a year or so (EIP-4444, for Ethereum). This relies on the weak assumption that the consensus algorithm will not finalize invalid data and then continue to build on it for over a year.

When you take history expiry alongside state expiry, the technology is absolutely out there to bound blockchain size.

[tromp]

> This relies on the weak assumption that the consensus algorithm will not finalize invalid data and then continue to build on it for over a year.

You don't need to rely on such a weak assumption.

You can use Incrementally Verifiable Computation to verify the entire blockchain history in constant time. See e.g. https://vitalik.ca/general/2021/11/05/halo.html

[dmitriid]

So, hackers remove your money or exploit an error in your smart contract, the history is there, okay. Then the data and transaction history is dropped. Yup, the "<magic buzzwords>" tells you that history is correct. So?

[tromp]

Yes, losing access to the underlying data is a big downside.

I think the ideal blockchain should offer constant time historical verification in addition to rather than as replacement of verifying the tx history. That also makes it robust against possible bugs in the design and implementation of the rather complex IVC technology.

Even if IVC is the only way to verify the full history, then it could still be limited to older history, e.g. up to a week or month ago. That would give you some time to investigate recent hiccups.

[everfree]

Just because you don't understand a data structure doesn't make it a magic buzzword.

https://en.wikipedia.org/wiki/Merkle_tree#Uses

[dmitriid]

> Other chains either drop, or plan to drop data that's been on the network for over a year or so

So when the next $625-million exploit happens [1] the hackers would just need to wait a year before any trace of them disappears? Awesome

[1] https://web3isgoinggreat.com/?id=2022-03-29-0

[everfree]

No, that is incorrect.

I'm talking about the data availability requirement that the protocol imposes on nodes if they want to remain connected to the swarm. I'm not sure what you're talking about - data doesn't magically get deleted from the internet with "no trace".

[dmitriid]

> Data doesn't magically get deleted from the internet with "no trace".

This is what you said, emphasis mine: "Bitcoin make the silly argument that ... a full history of all transactions needs to be maximally available on the network. Other chains either drop, or plan to drop data that's been on the network for over a year or so".

I'm reading exactly what you wrote. I don't know, may be the meaning of words in crypto world is "wrong".

[mkdirp]

Right, I never said you can trust exchanges. You do not have to use an exchange. That's the whole point of the decentralised nature of cryptocurrencies.

[jfk13]

The idea that ordinary people will (reliably, securely, safely) manage their own cryptocurrency holdings without using an exchange (or similar service) is ludicrous. This is blind techno-utopianism at its worst, and does nothing for humanity or society.

[bb88]

Further you need to trust the devs writing the algorithms as well.

BTC forked shifting much of the value of BTC onto another blockchain. If it happens again, you have to remain vigilant to recoup your value.

[randomhodler84]

Give it up. Bcash is worthless. The value is absolutely in the real Bitcoin, BTC. Bcash is and always a scam that only fools fell for.

[bb88]

That wasn't the argument. Self governance of the project was the argument. If it happened once, it can surely happen again.

[kgwgk]

> Cryptocurrencies have never claimed

Cryptocurrencies have never claimed anything - and never will.

Proponents of cryptocurrencies, however, have claimed an impressively large number of things - often contradictory.

[lostmsu]

Groups of people may claim contradictory things, and yet consist of individuals having consistent stories.

[kgwgk]

Sure, the point is that "cryptocurrencies have claimed" almost everything under the Sun - to the extent that it makes sense to say that "cryptocurrencies have claimed" anything at all.

[mumblemumble]

> Cryptocurrencies solve the issue of trust.

I would argue it's closer to the opposite. Cryptocurrency solves the question, "How do you operate a shared ledger in the absence of trust?"

I, sitting in my cushy home in the USA, with my cushy American, NCUA-insured accounts at a fiscally conservative credit union, don't have that problem. I get to benefit from a regulatory environment that has done a quite good job of directly solving the problem of trust for the vast majority of its participants, so that we don't need expensive, complex trustless cryptographic ledgers to manage our electronic assets.

[pcthrowaway]

> There it is. This is just an article blindly bashing cryptocurrencies. I implore you to ask yourself, what has previously been used to do all the above? That's right. Fiat currencies such as the GBP, USD, and other currencies.

Did you read the part after that? It sounds like they might use crypto for other purposes, and that they hope the useful things about it come to overshadow the way it's largely used today.

[mkdirp]

Which part? The part that I quoted was the last paragraph of the article with only a paragraph of hiring opportunities afterwards, unrelated to the article..

[Forgeties79]

>We need to comply with relevant regulations—know-your-customer laws, capitalization requirements, account limits, etc.

>>Not something cryptocurrencies have claimed they can solve.

I agree to an extent, but the problem is crypto has this massive culture of “we don’t need to solve it because no gods, no masters.” For them it’s a feature to protect, and they are far from a small minority in the crypto space.

[ebiester]

The article is saying "this is why we aren't doing it for our startup," not "this is why you shouldn't do it for your personal life or startup."

It is fair to say that for building a startup, crypto adds additional risk due to the issues they say. It isn't about if those can be overcome, but rather if it is wise for that group of people to approach it for the problem they are solving.

[mouzogu]

Yes, but I think a lot of the meta narratives around crypto currency (used to draw in fresh liquidity) are based around financial "inclusion" - as in bank the unbanked, and own your own keys etc.

But of course anyone that has interacted with crypto currencies, or more importantly the exchanges knows that's not really true. Mostly it's a very efficient means of taking money from the poor and diverting it to the rich. I think jackson palmer of dogecoin called it hypercapitalistic.

[bart_spoon]

> Mostly it's a very efficient means of taking money from the poor and diverting it to the rich. I think jackson palmer of dogecoin called it hypercapitalistic.

Anything that is designed to be deflationary, like Bitcoin, is inherently going to increase income inequality and harm the poor to the benefit of the rich.

[tablespoon]

> Cryptocurrencies have never claimed they address the hardest parts of financial inclusion. Cryptocurrencies solve the issue of trust.

Uh, what now? They actually do a worse job than traditional finance. What happens if I pay for something with a credit card and the vendor fails to deliver? Why I dispute the transaction and get my money back. It's less important that I have absolute trust in the vendor, because I have fall back mechanisms. Cryptocurrencies are deliberately designed so that can't happen.

The only "trust" problem cryptocurrencies solved was keeping track of stuff like account balances in a distributed ledger, but that's purely a problem created by the ideological choice of a distributed ledger.

[jimmydorry]

>What happens if I pay for something with a credit card and the vendor fails to deliver?

You are comparing crypto to a service that a third party provides on top of fiat. It's not a fair comparison as there is nothing stopping third parties providing the same service on top of crypto (and the third party does not necessary need human intervention to function when both parties act in good faith).

The more accurate comparison is: "What happens if I pay for a service or good upfront with cash, and get stiffed?"

Answer: If you know who they are, you take them to court and use the existing legal infrastructure. If you don't know who they are or it's too low value to be worth fighting, you leave them a bad review and share your bad experience with others to help them avoid the same.

>The only "trust" problem cryptocurrencies solved was keeping track of stuff like account balances in a distributed ledger, but that's purely a problem created by the ideological choice of a distributed ledger.

Keeping track of balances is a tough problem that did not (and still doesn't) have a good solution for after many decades of operation. Transfers between banks take days to settle (and weeks to finalize), same for payments between users and businesses.

Was it feasible to solve keeping track of balances between semi-trustworthy actors on a faster scale and without DLTs (Distributed Ledger Technologies)? Sure... but it has not eventuated and there was no sign it ever would. The telling sign for me is that many financial institutions are looking at, developing or rolling out their own implementations based on the demonstrated principles in crypto. That's good news, but I guess doesn't count for anything for some reason?

[tablespoon]

> You are comparing crypto to a service that a third party provides on top of fiat. It's not a fair comparison as there is nothing stopping third parties providing the same service on top of crypto (and the third party does not necessary need human intervention to function when both parties act in good faith).

You're missing the point: the GGP said "cryptocurrencies solve the issue of trust" but they clearly haven't in any practical sense.

It also a fair comparison, because I don't share the ideological obsessions that motivate cryptocurrency, nor have I made a speculative bet on it where I feel the compulsion to shill for it to save my own skin. As a practical matter, cryptocurrency is stupid and compares poorly to non-cryptocurrency alternatives in nearly all use caseses. It may make sense in some unusual ridiculously contrived use case, but that proves my point.

> Keeping track of balances is a tough problem that did not (and still doesn't) have a good solution for after many decades of operation.

That's not true: it has a sufficiently good solution that nearly the entire economy runs off of it. Meanwhile, the supposed "better" solutions are less scalable and use more electricity than Argentina to perform operations that a typical desktop PC is powerful enough to do.

[miohtama]

> What happens if I pay for something with a credit card and the vendor fails to deliver?

You are paying 2% - 5% premium on the price for this insurance that a credit card company providers. This is what the merchant gets charged in transaction fees and flat fees to get access to Visa/Mastercard network. There are many cases when you do not want to have insurance benefits of credit cardand you would simply take 2% cheaper price. However, with the current consumer payment rails (credit/debit) this is in practice impossible. (Granted some large enterprises like Amazon get charged less, but economics of scale, combined with the business practices, of Amazon have been found to be harmful for ecommerce ecosystem as a whole.)

I think it is ok to let the free market to pick the winner. Cryptocurrency might not be an ideal solution for all problems, but it might be still a good solution especially in developing countries where banking system is expensive, inefficient and corrupt. Let the option be available for others even if you do not use or believe in it yourself.

[diputsmonro]

With crypto you pay the additional overhead of gas fees, which are often unpredictable and may cost more than the item itself.

[miohtama]

Can you cite any source for this?

[tablespoon]

>> With crypto you pay the additional overhead of gas fees, which are often unpredictable and may cost more than the item itself.

> Can you cite any source for this?

It's common knowledge.

https://ycharts.com/indicators/bitcoin_average_transaction_f...

https://ycharts.com/indicators/ethereum_average_transaction_...

[miohtama]

I think your information is somewhat outdated. For example, paying on USDC using Solana or Avalanche networks

- Fee is less than 10c, less then a debit card

- USDC is backed by US Treasury notes, making it more solid than deposit in a bank

- There is no volatility risk of the cryptocurrency

- USDC follows US court orders for crime and money laundering cases

https://solberginvest.com/blog/how-much-are-solana-fees/

[Forgeties79]

https://crypto.com/defi/dashboard/gas-fees

[Forgeties79]

> I think it is ok to let the free market to pick the winner.

Seems to me the market is calling for regulation, because it’s a huge barrier to adoption. Ask any skeptic (who doesn’t have a moral issue with it such as environmental impact) and 9 times out of 10 they go “it feels like a scam” or “I don’t want someone to hack my money.”

People like to gripe about regulation, but we also find a little security in it. It often makes us feel safe at the end of the day - and when it comes money, that’s a cornerstone feature that needs be present.

[bb88]

> I think it is ok to let the free market to pick the winner.

You mean:

"I think it is ok for a _regulated_ free market to pick the winner."

An unregulated free market has scams we're seeing today.

[rvz]

I'm sure many critics are finding it extremely difficult to ignore the certain inevitable failure of cryptocurrencies everyday since, the same arguments presented are once again refuted by yourself.

They were crying over HN when Stripe jumped in for crypto payments due to regulatory clarity and they are crying over it again because it still hasn't died faster than they expected to.

The simple reality is, it isn't going away; even after regulations.

I challenge them to continue to ignore it, as we all know it will collapse real soon. /s