I've read this "crypto has no use-case" meme a lot recently, and it's always perplexed me. Crypto is clearly the easiest way to do international payments right now, particularly for countries with restrictive capital controls, like, for example, Argentina (https://www.bloomberg.com/news/articles/2021-08-13/argentina...).
Sometimes this is qualified as "crypto has no use-case except crime", but what obligation do I, a US person, have to follow or respect corrupt Argentinian regulations?
I make international payments regularly using things like Wise (formerly transferwise), and it’s far simpler than any crypto solution, and accepted by everyone.
And yes, I own some crypto and could use it if anyone was willing to take it.
The only case where it is simpler is there there are capital control, and in that case it is being used illegally.
This is not because such payments are illegal, but rather because the Brazilian financial system has poor norms and poor rule-of-law: https://techcrunch.com/2021/03/16/wise-accuses-former-brazil....
And if you're sending money to Argentinians, they would beg you for it, as otherwise your recipient would just receive a fraction of the USD you send because of the difference between the official rate the government enforce, and the real rate.
Read about Blue Dollar in Argentina and you'll realize you're very mistaken in your idea that Wise is the solution there.
bitcoin is by design inefficient, and it could have been efficient by design. the inefficiency model implies the need for large compute resources, which is a form of industrial, technological, and infrastructural prowess and capacity. See smaller and more power-insecure nations banning crypto-mining. Bitcoin only makes sense from an electricity standpoint when you have excess electricity that you would otherwise have no way of using. Hydropower, solar, and virtually all power plants have some excess capacity that they could theoretically convert directly to mining operations, for as long as they had no consumer power demands. The theory behind bitcoins numbers/algos is that the power plant shouldn't have to make a choice between serving customers and running crypto operations, they make the most possible serving customers, and burning excess supply.
Market conditions have temporarily distorted bitcoin mining distribution, but with fewer coins left to mine and a growing understanding of bitcoins algorithmically enforced economics, you will see it banned from everywhere that it does "waste energy", and lots of miners will realize that "stateless" currency depends entirely on industrial surcapacity which is entirely dictated and governed by the state. So a nation's governance structures and ability to adapt to a developing world turn out to be just as critical as the country's ability to supply massive energy demand. The places that are able to do this are typically worth spending money in so it makes sense as a unit of "value".
bitcoin was an attempt to replace gold mining and gold transfers, but it was also an effort to represent something about the miner who mined it. A bitcoin miner had to have lots of cheap energy and the technological capability to run distributed compute efficiently. bitcoin has been narrowing in on global energy surcapacity, and it turns out there isn't any. This will have all kinds of effects on the price of bitcoin, as lots of inefficient players and players in insufficiently developed economies are forced out of the mining pool.
however in places where bitcoin is mined efficiently, one could theoretically use those same bitcoins to purchase either cheap (or even green) electricity, efficient (cool) compute, or whatever else goes along with running massive mining facilities.
The receiving account holder may need to declare the payment to their local tax authorities, but that's true of crypto too, it's just not automatic.
Whereas with crypto, you get transparent fees/rates, transaction confirmation in minutes, at any time of day, with a permanent cryptographic record of payment, and you don't unnecessarily leak information to the recipient's local tax authorities.
There is a reasonable question where allowing money laundering for good would offset the use cases for those with more evil intentions.
My opinion is probably not since most people in Argentina are going to launder a fraction of a BTC at a time, but all that would be offset by the harm from criminal syndicates (drugs, human trafficking, even oppressive governments).
This feels like solving an edge case with a massive potential downside. It would be a shame to have provided a technology that freed the people of Argentina, but at the same time, allowed the narcos to enslave them.
If an American wants to send money to someone in Argentina they have plenty of options that are cheaper and safer than Crypto: Wise, PayPal, Xoom, even Western Union.
If an Argentinian wants to evade capital control laws in their own country crypto may be their best option. Just calling it corrupt, as a foreigner, does not make it legal or ethical.
We're blinded by what was, and wrongfully infer what will be.
Also, we mix in our biases, Douglas Adams said it best:
"I've come up with a set of rules that describe our reactions to technologies:
1. Anything that is in the world when you’re born is normal and ordinary and is just a natural part of the way the world works.
2. Anything that's invented between when you’re fifteen and thirty-five is new and exciting and revolutionary and you can probably get a career in it.
3. Anything invented after you're thirty-five is against the natural order of things."
It's fine to express skepticism when a new technology gets immediately dismissed by people who may lack foresight. It's harder to sustain that when over a decade goes by and the "new thing" is still struggling to deliver on its promises.
You want us to believe that crypto-currency is like the first three examples, but it's been long enough now to be certain that it's far more like the latter.
You may not believe me, never mind then, but sometimes I see good criticism with interesting new ideas and little to no appeal to emotions, but this has none of that.
You seem to be only choosing technologies that were exceptionally successful. An odd bias.
Most of them aren’t.
- What's the total valuation today of companies dealing with Laserdisk?
- What's the total valuation today of companies dealing with crypto?
You'll have your answer about who may have a bias there.
The other comments on this thread are worthless and just shilling crypto.
> The other comments on this thread are worthless and just shilling crypto.
Let me try to present a rebuttal which hopefully you will not dismiss as a "shill" for crypto.
To begin, Tether is obviously ridiculous and most people, even in crypto acknowledge this. However, Tether is not precisely an unregulated "central" bank, but rather a semi-regulated private bank. I say semi-regulated, because they do have some oversight (https://www.cnbc.com/2021/02/23/tether-bitfinex-reach-settle...). It also has many competitors such as USDC, Binance USD, DAI, which are comparable in size: https://coinmarketcap.com/view/stablecoin/. USDT is less than half of the stablecoin market by capitalization, but it is over 80% of the daily transaction volume of the stablecoin market.
If we dig a little deeper though, you can see that the daily transaction volume of Tether often exceeds its market cap: https://nomics.com/assets/usdt-tether/history. This suggests that most owners of Tether are only holding it for a short period of time, which make sense given that on centralized exchanges like Binance it many, if not most, markets are denominated in USDT as one half of a trading pair.
So why, if Tether is generally understood by the market to be backed by nothing, and run by dubious individuals, is it still worth something? It's not because people are stupid, but because of a combination of 1. the enormous international demand for cryptocurrency assets, 2. the lack of sufficient "backed" digital dollars to efficiently lubricate the quantity of transactions people want to make and 3. Gresham's Law (https://en.wikipedia.org/wiki/Gresham's_law), which says given two kinds of commodity money, people will spend the less valuable one, and save the more valuable one.
It's honestly a fascinating example of a money forming out of the matrix of exchanges in a barter economy, and yes, it's a dubious product that will likely break its peg and crash to nothing at some point. But because the total market cap is relatively small, there's not really any significant contagion or "bank run" risk here (BTC lost more than Tether's entire market cap today and mostly people just shrug and say "that's crypto").
The question I want you and all people who say "crypto is a fraud, ponzi scheme, has no value" to ask yourself is "If I'm right, why is there such demand to buy crypto?". Some crypto-critics argue it is because people are stupid and greedy, but to me that's a lazy and elitist answer. My interpretation is that crypto demand is driven by the same forces that cause people to buy condo's in New York City, London, Vancouver, etc. which then sit empty. It's mostly, right now, a combination of inflation and capital flight.
But there is also a growing sector of the crypto-economy which is capable of doing things which are not feasible in traditional finance (e.g. crowd-funding like Gitcoin, anonymous payments like ZCash, or decentralized money like MakerDAO). I don't think current crypto-asset valuations are justified by that sector, but I am hopeful that in the coming years those use cases will grow and will create extraordinary value for the world.
There are a few reasons, but the main one is the same reason there was demand for beanie babies.
Is that not by definition fraud? It's like the US federal reserve printing a bunch of stimulus. At least our central banks are nominally appointed by elected officials, on the basis of a social contract.
Citation needed. The fact that there are lots of scams or projects of dubious value doesn't prove that everything is. It's not really different than looking at tech startups, most are bad ideas that won't ever work but some do work.
The ability to print money and misrepresent the value of the dollar (i.e., CPI, GDP) combined with incentives for personal enrichment should be evidence enough that government-controlled currencies is not the scalable solution we thought it was.
We're about to experience inflation like we've not seen in the US in a long time and the resulting transfer of wealth and increase in inequality will be a catalyst for the adoption of crypto.
I hope to see you all there.
If cryptocurrency is an inflation hedge, why are the cryptomarkets tanking when inflation is freshly high?
This reads like the writer had a conclusion in mind and couldn't be bothered to actually look at any of the existing or potential future use cases and wrote off the entire thing as a scam. It's possible the conclusion is true but too many of the actually important details are missing and too much of the focus is on completely irrelevant things (like the fact that some blockchains are proof of work so even proof of stake blockchains would be Ponzi schemes) for this to even be worth reading for most people.
If distributed, decentralized, append-only databases have wider applications (outside of crypto), what are those applications? When will we see the disruption?
David Gerard showed that blockchain is wearing no clothes in Attack of the 50-foot Blockchain and nothing has happened since he published that book to make me think he was wrong.
The author isn't claiming they're skeptical. They're claiming it's a ponzi. The burden of proof is on them to demonstrate their claim has merit. They can't fall back on saying they're just skeptical. That's not what they're arguing.
Blockchains (and cryptocurrencies that ride atop them) keep track of all the transactions going back to its inception. Those blocks get passed around the chain. Some nodes archive them, but don't old blocks still circulate? How far back do blocks get circulated before they're no longer circulating (2, 3, 4, 5, 10 tranactions back, I'm sure it depends on the currency)?
I've heard right now BTC is running at like 3 transactions a second. Astronomically far from the same number of transactions in fiat currency. What happens if crypto was to ever reach parity with fiat transactions? Every pack of gum, every donut, every Starbucks transaction gets circulated through all nodes the same way that every hedge fund movement, real estate closure, or business acquisiton does? It seems like all the history blocks would gum up the network traffic of circulating current/real-time transactions. The amount of overhead to process 3 transactions per second isn't enough to delay those 3 transactions, but as more traffic enters the chain it seems like the amount of supporting chatter will grow even faster.
How do cryptocurrencies offload the administrative/archival overhead from the transactions in order to process transactions so you're not standing around waiting for your BTC to process payment before your coffee gets cold?
In network terms, we don't all rely on root DNS servers. Those are there for other DNS servers to pull from a trusted source. Hitting up the root DNS servers is still bad etiquette, right? The local mirroring DNS servers are faster and provide lookups for the here-and-now. If it doesn't know, the DNS server will query the roots to locate the authoritative record keeper for the domain in question (and cache it for future reference).
I see blockchain like that DNS but it requires all DNS servers to agree with the resolution before providing the results to the user. That seems like it will be incredibly slow and at some point all that administrative chatter will outstrip the capacity to process a transaction or "query".
With fiat currency, we have localized transactions. Sometimes a credit card processor may go down, sometimes your bank cannot be reached. In those cases you can resort to paying with cash or gasp a check. Those transactions get processed at the lowest local level and there's no need to concern some bank in Pakistan or the US Federal Reserve that you just paid $3.50 for an overpriced soda at Jersey Mikes (which they are!) from your checking account.
I'm very keenly interested in how these problems are to be solved when/if the dream of crypto being a truly global alternative to "cash"/fiat.
Can someone fill me in?
> Lightning is a layer on top of bitcoin that can handle an arbitrarily high transaction throughput over time, while still basing itself on bitcoin’s underlying security. It works by opening multi-signature channels between nodes, so that a user can send coins from one node to another, using a series of interconnecting nodes along the way.
So how does doing this exchange bypass the blockchain "administrative" traffic? Do transactions in Lightning get priority while non-transactional details get lower priority? She says BTC is the "final settlement layer", which I understand better since she words it like that. So that means that all transactions will be between apps and those apps abstract the actual transactions between accounts? So it's not that end users will be using the blockchain any more than bank customers use the SWIFT network, right? Such transactional exchanges will go through a clearinghouse to settle transactions?
Saying they're a Ponzi Scheme over and over again doesn't make them one. Blaming the group for the individual is certainly in the zeitgeist, but it's still BS. There's so many ways it's not a Ponzi Scheme. Maybe Tether is? But Tether isn't all cryptocurrencies.
"... making unmediated online transactions securely in a trustless environment in this way is not without costs."
Yea, sure, but it doesn't support the thesis.
"Given that cryptocurrencies don’t produce anything of material value..."
How is that a given? What defines material value? Is the author a Gold cheerleader? Do they expect us to eat dollar bills?
"The 2008 financial crisis made clear why the financial sector must be brought under public control."
What does public control mean? They are, that's what the SEC is.
Ok, so that would suggest that Tether is a Ponzi scheme, if anything. Not all of crypto. smh
He's just making a prediction, as a novel Nostradamus, and not considering multiple scenarios.
