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Crypto Market Crash Leaving Bankrupt Startups in Its Wake (bloomberg.com)
329 points by petethomas 42 days ago | hide | past | web | favorite | 497 comments



> Many of the companies are suffering because they kept a portion of their funds in digital assets

Lol that makes it sound like they had a choice. Because essentially none of the ICOs did KYC/AML, none of them were allowed to create bank accounts anywhere worldwide so they had to keep their money in ETH.

That’s why they’re just starting to go bankrupt and will mostly all go bankrupt in 2019. If you think it’s a bear market now, the real crash hasn’t even started yet.

If you want to see something typical, here is what Jez, the founder of FunFair, wrote one year ago on Reddit:

"in the august company announcement we said we were holding more than a year's running cost in cash and thats still the case. our holdings are approx $6m in cash (dollars), and several million in bitcoin (which keeps going up in value!) and a lot more in eth. in short, we have capital of more than $30m, at current valuations. we're not going to starve in 2019, unless bitcoin and eth values plummet which seems unlikely. bitcoin is more than double the price of the time of our token sale in june."


Definitely. When prices are going up up up and the money is flowing freely, few really question what economic value is being created. But now that it's obvious to even the fools that they can lose money, they're going to have to figure out what valuable service these companies can provide to regular folks.

When I contrast this with the end of Bubble 1.0, the biggest difference I see is the lack of actual use. 2000 was an incredible bear market, especially in tech. Even good startups died, and the ones who weren't creating value died quickly. The Internet, though, still had hundreds of millions of daily users. Things like email and the web browser and downloadable MP3s made people's lives better, and they weren't giving them up.

But who uses Bitcoin for anything but speculation and maybe some light financial crime? As best I can tell, approximately nobody. The NYT tried using it for daily life back in April and it was a bust. [1] The few major online retailers who offered to sell you things in it have removed it again. Even major Bitcoin proponents admitted it was terrible as a currency.[2] And as far as I can tell, none of the zillion other coins have significant real-world use either.

I think there's truly nothing to sustain an "industry" here. Valuations are going to drop to (and probably below) whatever can be justified by cash flows, which in turn is based on economic utility to people outside the bubble. If that number isn't zero, it's at least very, very small. So as you say, this is only the beginning of the end.

[1] https://www.nytimes.com/2018/04/16/nyregion/new-york-today-l...

[2] e.g., https://avc.com/2017/08/store-of-value-vs-payment-system/


You're forgetting one major use: actual crime.

Black-market drug sales probably won't be too affected by the crash, they already had a network before Bitcoin.

But ransomware! Oh man, that's nowhere near as easy nor as profitable without a high-value cruptocurrency. If the crypto crash ALSO took out ransomware developers, that's two birds with one stone, as far as I'm concerned.


> But ransomware! Oh man, that's nowhere near as easy nor as profitable without a high-value cruptocurrency. If the crypto crash ALSO took out ransomware developers, that's two birds with one stone, as far as I'm concerned.

That'd be great, but so long as there is some nominal value in cash to some cryptocurrency, wouldn't ransomware just ask for the same amount of underlying money? That is, just increase the number of coins required for ransom? The big benefit in cryptocoins for ransomware isn't the increasing value, but the fact there is no intermediary that can turn off accounts or rollback transactions.


I guess that's true, as there's no alternative means of getting paid. But the downward spiral in price perhaps make ransomware a less attractive occupation now.


The downward spiral in price will only result in you having to buy more units of currency to pay the same dollar amount of ransom.

It's the same with the dark markets. It's not like dealers are suddenly going to charge less money for drugs now just because the intermediary transaction currency is worth less.


Randomware doesn’t care about the exchange rate. They just funnel cash through crypto’s because it’s a simple way for them to take digital payment. In the down market they can’t cash out as many dollars per bitcoins, but the victims also get way more bitcoin for the same amount of dollars.

A low valuation might affect coinminer malware though.


They do care, though, that Bitcoin has non-crime use. If the crash means that speculation drops significantly (which I expect to be the case) then it could be a reasonably quick slide to where "bitcoin" in effect means "crime dollars". That in turn means that a lot of exchanges will shut down due to low volume and regulatory pressure. There's little point to using Bitcoin for ransom if your victims have a hard time getting money in and you can't get your ill-gotten gains out.


They need payment providers, that are easy enough for an average joe to use. That may be harder to get


Are bitcoin payments somehow easy for the average person to use now? Seems unlikely.


Learning how to properly use paper money was something I learnt at age 7. Debit card at age 15. Credit card at age 23. Bitcoin at age 31. Bartering hides with the natives at age 90.


iTunes gift cards or the like seem to be more popular than cryptocoins it seems.

Banks are much happier to deal with you when your source of income is "The Apple Store", instead of a crypto exchange.


My community has quite a few businesses that gladly take bitcoin, at whatever valuation. Unfortunately when the price is on the upswing people don't want to spend it because it'll be more profitable to hold it, and when it's holding steady they don't want to spend it because they feel it could take off at any instant, and if it's crashing they don't want to spend it because that would lock in their losses and they'd rather wait for it to recover.

Hopefully one day it will stabilize enough to be worthwhile as a currency. We're certainly not there yet, but it's improving. Despite the spectacular fall in values, this isn't as severe a crash as has happened before, percentage-wise.


I wouldn't hold my breath on the "stable currency" part. Actual stable currencies are actively managed by people with expertise and major resources. At best I think Bitcoin will end up following its design of being deflationary, which history shows leads to hoarding. But I think it's more likely it will either drop to near zero or continue wild price swings.


Do they list the prices in bitcoin, or do they just use a payment gateway that lets them charge USD from bitcoin users?


My previous company (AirFox) did an ico, we had a bank account, and we sold everything. We also did KYC/AML for all purchasers. Most of the USA firms did.

However, the SEC also just settled with AirFox for selling unregistered securities, so that didn’t exactly go as planned!


If the settlement was for less than you got from the ico it may have been worth it.



They have to return investors' funds. Fine is on top of that. https://www.sec.gov/news/press-release/2018-264


Well if one or two investors died due to a heart attack from the bear market... that's net win anyway.


That sounds like as good a business plan as any in the cryptocurrency field.


lol


Why would you go along with a scam like that?


TenX converted a large portion of their ICO proceedings into USD, see under "Finance" https://blog.tenx.tech/tenx-transparency-report-q2-2018-98bb...


I'm not sure that's quite true. All the ones I'm familiar with had bank accounts to pay wages, rent etc. And they also seem to have been able to change crypto to fiat. I opened some fiat-crypto accounts and it wasn't that hard - you have to scan your passport etc.


Yeah any business can create a bank account, but no bank is going to let you just dump $30M in the account without accounting for where it came from. You’d need a relationship with both the bank and the regulators before doing the ICO, which almost none of them had, especially early on.


Reading the news about Danske Bank, the reality seems to somewhat disagree with you. Some banks a very happy to deal with shady money, as long as there’s _a_lot_ of it.


Also in the news: Many drug dealers are suffering because they used all their drugs. And many liars are suffering because the believed their own lies.


> Lol that makes it sound like they had a choice.

They could have simply kept their assets in stable coins, like Dai, Tether, etc..They could also sell into USD on exchanges that allow you to trade USD (e.g. Kraken). Another option would have been to open a hedging short position on say, Bitmex. There's lots of ways they could have cashed out, effectively.


Tether has long been suspected of being a complete and total fraud, a wildcat currency propped up by mere promises, not proof, of backing cash.

Exchanges have also been suspected of manipulating prices to liquidate future positions, there’s literally a twitter account dedicated to force liquidated Bitmex position.

When every player is operating in bad faith it is very hard to come up with a legitimate way to protect yourself other than not participating.


> Tether has long been suspected of being a complete and total fraud, a wildcat currency propped up by mere promises, not proof, of backing cash.

Those suspicions have always been extremely poorly grounded.

> Exchanges have also been suspected of manipulating prices to liquidate future positions, there’s literally a twitter account dedicated to force liquidated Bitmex position.

Not by anyone serious. Sure, people get liquidated all the time because they don't have enough maintenance margin. The risks are very clearly defined, and all you have to do is read them.

> When every player is operating in bad faith it is very hard to come up with a legitimate way to protect yourself other than not participating.

There is no evidence that the major exchanges are operating in bad faith. And even if they were, what is your point? My point is that they could have neutralized the currency risk of their assets. And that point is absolutely true.


> Those suspicions have always been extremely poorly grounded.

I am really quite ignorant on the issue, but they seem to me like reasonable suspicions when Tether’s purported “audits” are anything but.


They no longer claim to provide audits.


The fact of the matter is the market continues to value Tether at $1, despite having multiple alternatives. So, even if it is the case that Tether is insolvent...it was still a much better investment than leaving the money in regular crypto. QED.


Markets also valued beanie babies highly for a while. Pretending that markets are purely rational is going to get you hurt.

If the case is that Tether is actually insolvent, then history gives us a very good example of exactly what’ll happen once the run starts.


> Markets also valued beanie babies highly for a while. Pretending that markets are purely rational is going to get you hurt.

My point isn't that the market is rational or perfect. My point is that they could have hedged.


Almost impossible to do when the markets are rigged.

I believe for a while Bitfinex would let you wash trade with your own account, that’s how poorly run these markets were.


>They could have simply kept their assets in stable coins, like Dai, Tether, etc..

To turn into dust?

>They could also sell into USD on exchanges that allow you to trade USD (e.g. Kraken).

And trust Kraken then.

>Another option would have been to open a hedging short position on say, Bitmex.

and trust bitmex then.

There are no scalable options to cash out $10m to a bank and sleep well. You could cash out into some "stable coin" only to wake up to it costing $0.04 (hello nubits). Tether is no safer in that matter.


> To turn into dust?

Oh, you mean the 'dust' that is worth exactly $1 at this moment, where Ethereum has lost 90% of its value? That dust?

> And trust Kraken then.

Yep, the exchange that's been trustworthy and operated seamlessly since its inception, sure. And still does.

> There are no scalable options to cash out $10m to a bank and sleep well. You could cash out into some "stable coin" only to wake up to it costing $0.04 (hello nubits). Tether is no safer in that matter.

You may not sleep perfectly, but you'll sleep a lot better than if you're holding it in crypto. And that is my point. And if you wanted to use Dai, you could actually sleep perfectly. Dai has held up perfectly well, and you can hold it off-exchange.


Past performance does not indicate future results.

The most common disclaimer in finance, but equally applicable to all things in life.


That's a cute saying, but let me know when you park your money in a bank that opened yesterday.


I don't see your point. It's a common legal statement to explain that there are no guarantees. Are you arguing that you can in fact guarantee what the market is going to do?


No, i'm arguing that you are not making any kind of point by saying that. What is your statement intended to prove?


I would feel totally safe parking my money in any FDIC insured bank regardless of when it opened.


That is a nice sounding meme, but it has little basis in reality. What is the probability that microsoft is going to go bankrupt 1 year from now? If your answer is "a very low probability" then that means that past performance does indeed indicate future results.


That statement is legal disclaimer that refers to a lack of guarantees because that is, in fact, the reality of the market. Probability is not an argument against it.

However, if you would like to discuss probabilities then the history of the crypto market only reinforces the trend of failure as discussed in this thread.


> There are no scalable options to cash out $10m to a bank and sleep well. You could cash out into some "stable coin" only to wake up to it costing $0.04 (hello nubits). Tether is no safer in that matter.

Gemini, Coinbase?


Only if you did KYC on every single customer.


There's no such thing as a stable coin. Only coins that haven't crashed yet.


USDC, PAX all backed legally, will always be worth $1.


*Always until the backer goes bankrupt


Except the next iteration of these things will use stablecoins


Now what was it you were saying about "stablecoins"...?

There certainly seem to be a lot of charlatans who flippantly throw incoherent terms like that around as if they had any meaning, even though they're utter nonsense, don't you think?

https://cryptonews.com/news/usd-133m-stablecoin-basis-is-rep...

USD 133m Stablecoin Basis is Reportedly Closing Down

The well-known stablecoin project Basis is shutting down operations and returning what is left of the funds they raised to investors, The Block reported citing undisclosed sources with “direct knowledge of the situation.”

The shut-down reportedly follows regulatory problems, although details are sketchy at this point. According to sources, an announcement had to be made by Basis some time Wednesday evening. As of press time Thursday morning, no such announcement has been made.

Basis did not respond to a request for comment.

But a lot of other people commented, for example:

TwitBot @vasilipoupkine1; Replying to @AriannaSimpson: I’m kinda pissed they are blaming US Govt instead of their frankly utterly nonsensical stable coin design. Algorithmic stable coin is a nonsensical concept. There is no law, though, that somehow prohibits it. Lame.


Do you burn cleancoal to mine stablecoins? Like militaryintelligence is fightingforpeace? Yeaaaaah.


Actually, when 2 opposing militaries are more or less equal, the most likely outcome is peace. When they are drastically unequal is when war becomes likely.


Unless you're talking about some board game like "Risk", I believe the causes of international war and peace are a little more complicated and nuanced than the "more or less equality" of their militaries, if that could be even objectively measured or absolutely known. Do you really think "military inequality" was the root cause of WWI and the Civil War?


No, nobody does that. There is no mining involved

None of your crypto comments are coherent, I can tell they are intended to be cynical but they also dont make sense


Let me coherently explain it for you so you're not so confused: "stablecoins" is a oxymoron. Like "military intelligence" or "fighting for peace" or "clean coal". Get it now?

http://tmbw.net/wiki/Oxymorons,_Paradoxes,_And_Contradictory...


This is what efficient markets do according to theory: capital deployed in areas not as productive relative to another move to the more productive one. Wait or is that just crazy investors hoping to get into the next bubble? Either way good. All these alt-coin save-the-world businesses can go the way of the do-do, I still need tools to help make Ansible not suck and learning K8s and figuring out how to scale MySQL. I’d rather see money and talent go into making tools that are actually useful even more useful than creating self directed businesses etc.


It's a very good point. A lot of smart people jumped into an area that if I'm feeling very generous I would call "unproven". And I'm all for startups trying new things, but we could have learned just as much about the possible utility of cryptocurrencies with 100x less resources.

My main worry now is that some of the people will have been damaged by this. Some of the interest we can write off as irrational exuberance; hopefully some will have gotten their fingers usefully burned and will be more careful choosing what they work on next time. But a lot of the field was somewhere between chasing a bubble and outright scammy.

It reminds me of people I've seen burned by MLM schemes. Some say, "never again!" But some really buy into the get-rich-quick thinking and will keep on making the same mistake in different forms. "This time it will be different!" But it never is.


This is the financial version of natural selection. I don't feel bad for people losing their money over something that had little purchasing power and was very obviously unstable.


>I would call "unproven".

Why wouldn't you call it novel? It's only 10 year old technology at this stage.


What other ten year old technologies, that went on to be successful, were as useless for their stated purpose as crypto?

If crypto is money, can I:

Spend it at Amazon? My grocery store? My corner deli? Pay my rent? Pay my employees?

If crypto is a store of value can I trust it will have any rational storage value over any time period?


Digital cameras, when invented back in the 70s. It took decades until they were usable, and still another decade until they started to approach the quality of nondigital.


It's not a very good example, in that the barrier there was physical development of hardware. This is purely a software problem.

Another obvious difference is that from the first moment they were on the market, they had some practical use, and the amount of use grew quickly. If we count from the Kodak DCS 100 introduced in 1991 at a price of $20,000, then ten years later we see that they were being bought at the rate of 18 million units a year and rapidly rising. [1]

Bitcoin, in contrast, has very little practical use 10 years after introduction. Its merchant adoption peaked years ago. That's far short of what an actually useful digital payments product can do. Look at M-Pesa [2] for contrast. It was introduced only a year early than Bitcoin. It has tens of millions of active users, and processes up to 900 transactions per second, with an average of 160 per second. [3] A huge success compared with Bitcoin's average of 3-4 transactions per second, most of which are speculative rather than practical. [4]

[1] https://www.dpreview.com/articles/5474101424/pmaresearch2003...

[2] https://en.wikipedia.org/wiki/M-Pesa

[3] https://www.nation.co.ke/news/MPesa-transactions-rise-to-Sh1...

[4] https://www.blockchain.com/en/charts/transactions-per-second


> If we count from the Kodak DCS 100 introduced in 1991

Kodak invented digital cameras in 1975.


>> If we count from the Kodak DCS 100 introduced in 1991

> Kodak invented digital cameras in 1975.

DigiCash was founded in 1990 based on a paper from 1983.


Exactly. I think the fair place to start counting with both Bitcoin and digital cameras is first consumer launch.

And with M-Pesa versus Bitcoin, they're both digital cash, so I think it's even easier to see how badly Bitcoin has done.


Yes, but the real world advantages of digital cameras were apparent from the very start.

Currently there are zero real world practical use cases for cryptocurrency that aren't associated with illegal activity. If anyone knows of legal applications of cryptocurrency, feel free to respond. I'd love to be proven wrong.


Digital cameras were useful since day 1. Nobody was confused about what to do with them. What you're talking about as "usable" is just technological refinement that happens to all things.


And the industry leader (Kodak) at the time didn't think digital would be useful and delayed R&D. But don't worry they came up with Kodakcoin!


To convert Kodakcoin to cash, you have to send rolls of 12 Kodakcoins at a time off for a week to the lab to be developed. But just wait until some day there will finally be a Coinomat booth in every shopping center parking lot that can develop your Kodakcoins into cash in only 24 hours!


Great example!


>If crypto is a store of value can I trust it will have any rational storage value over any time period?

There are different types of cryptocurrencies and the one you are looking for is known as a "stable-coin". I suggest looking into Bancor and Maker DAI to get a better view of how these currencies keep their value over time.


> Spend it at Amazon? My grocery store? My corner deli? Pay my rent? Pay my employees?

YES on all accounts.


No, you can't spend Bitcoin at Amazon. They don't accept it.

The others depend on whether they choose to accept it or not. It's not the same as legal tender, where they must accept it.


I don't think "legal tender" means what you think it means.

In many jurisdictions (including the US and the Eurozone, as far as I know), almost no business is required to accept legal tender as payment. Legal tender is only required to be accepted when settling a debt, and even then there can be restrictions (such as a maximum denomination or number of banknotes or coins, a maximum amount that can be settled in cash, or contract obligations).


I think it does mean exactly what I think it means :)

It's not about debt, it's about payments. If there is no agreement to the contrary, then you must accept legal tender. You also don't have to accept anything else.

Amazon have chosen not to accept Bitcoin, and instead to accept payment via certain credit cards. Saying that they accept Bitcoin is false.

Trying to pay people unexpectedly in Bitcoin or chickens or something else will not go well. They can demand legal tender, unless there are other agreements in place.


I still don't understand why you are mentioning legal tender in this discussion. Legal tender is cash, credit cards are not legal tender.

Therefore Amazon does not accept legal tender.

Yes, businesses like Amazon could demand payment in legal tender (or credit cards, or Bitcoin) but they are under no obligation to accept any of those forms of payment.

Bitcoin is no different than credit cards with respect to legal tender.


Ah yeah, the OP is arguing elsewhere that Bitcoin is legal tender in some European countries, and here he is trying to say you can use it to pay your employees and Amazon etc. I can see how I am confusing things, sorry.


You can use a service to pay Amazon shopping with bitcoin.

https://www.cryptocompare.com/coins/guides/how-to-buy-on-ama...


Sure, maybe there's a service that allows you to pay with live chickens for Amazon gift vouchers. By your definition that makes live chickens money, I guess.


Chickens could very well be money, at least bones have been used before.

edit:https://www.bbc.com/news/av/business-18827269/a-brief-histor...


You're missing the point. Again. He countered your argument. You reply ignores that fact, and just tries to derail the conversation.


If that is true for you, I'm impressed. Could I see the properly redacted receipt from any of these listed places showing you paying in crypto? Maybe a pack of gum would be easiest. It'll be like 0.0000000001 BTC.


Could also show 1 mBTC but that's a UX question imho.


Again, you're missing the point, and trying to derail the conversation. He called you on your outrageous claim, asking for proof. You dodged and tried to derail, instead of providing the proof he requested. But that certainly proves his point, that you're not sincere about your extraordinary claim "YES on all accounts" that you can't even provide any ordinary evidence to support when asked to, instead you suddenly try to change the subject to UX.


I agree if such a receipt from a corner store could be shown, it could have many ways of displaying the amount of BTC paid for the pack of gum. I would love to see such a receipt.


Because the vast majority of crypto/blockchain things are either outright scams, obviously doomed to fail ("it's Yelp but crypto!") or misapplied ("we're using blockchain intternally").

I honestly can't think of a single crypto startup that's had a compelling product.

Edit: typos.


You might check out numer.ai, along with their coming data marketplace, Erasure. They've been running for awhile...


How does that make them less novel?

Your impression that the "vast majority of crypto/blockchain thing are either outright scams" is a personal opinion for which you can't find supporting evidence. The SEC has only issued a hand full of notifications and LOST the only court case I've seen so far.


"Scam" was only one of three categories I mentioned, but regardless here's a nice long list: https://www.scambitcoin.com/blacklist

Ten years into the Web we had Google, Amazon, Geocities, eBay, Flash games, and thousands of existing companies moving their operations online. What is a single blockchain-related success we can point to other than cryptocurrency exchanges?


We had these companies by '99, so assume the starting point for the ten year timeline is 1989. The 'internet' had already been opened up to certain universities/institutions in 1981 (and was in government R&D years before that). There were plenty of people in 1991 who said the internet wasn't going to be or do much of anything.

The most charitable reading of the crypto tech timeline is to say that the bubble popped at the protocol layer instead of the application layer. In that case, we're somewhere around 1989-1993/94. Maybe we're still waiting for a Tim Berners-Lee.

Who knows.


Who manages that list? Why do you trust it?

edit: I looked through the site and most of the "scams" seemed more like basic phishing sites than actual blockchains or cryptocurrencies


Your anecdote is irrelevant. Scam sites usually give up their bitcoin related domains when they fail, which invariably get taken over by basic phishing sites. You should look on the Internet Archive to see what the scam sites were actually doing, before they went out of business and had their domains taken over by phishers.

Funny that you trust and parrot Bitcoin scammers, but you don't trust a list of Bitcoin scammers. Afraid some you've invested in, hyped and promoted yourself might show up?


What anecdote?

I've pointed out that most of the scams didn't actually involve a blockchain or tokens, as the SEC cases against a few of them show.

The question of who manages the list is important so we can tell what method was used and what's the motivation to keep it. One of the areas I'm most interested is cryptoeconomics and of course fairness and transparency matter to me which is why I wonder why would you defend this site as if you knew it to be true and accurate.


Your anecdote about looking through the site. How could you possibly not understand that?

Nothing I said in any way was a defense of the site. Where did you get that idea?

You're obviously not reading anything that I wrote, and just trying to be contrary to make it sound like you're making an argument. Please don't bother replying if you can't understand what I'm saying, and make stuff up that I didn't say.


Why not both?


Regardless of what's happening this winter, there's still way too much money sloshing around in the crypto space, money that is being ineffectively allocated... It'll be another 5 years at a minimum before any of the markets in the crypto space will be anywhere near "efficient", in my estimation.


thinking globally... if someone holding the bag (i.e. bought at 20k and sold at 3k) - someone (smarter?) else got the difference and now have capital to deploy it more efficiently (if we assume bitcoin is not efficient deployment of resources) So overall things did not change - non-efficient money-managers lost, efficient money-managers got more resources to deploy to better alternatives.

is my thinking flawed somewhere?


No you're right. There's always someone on the other side of the trade. The cynic in me thinks though nothing changed because the person on the other side of that trade more often than not is always on that side of the trade -- the winning side -- and the schmuck who bought at 20k and is selling at 3k is usually at that side of the trade -- the losing side. So those that have capital now have more of it -- since all economics is just the transfer of capital and goods from one entity to another.

There are useful things to come out of bitcoin even though I want the whole idea of alt-coins to die: the blockchain is novel and I think could have some really good uses.


Just curious if you have any examples of good uses? I haven't seen much although I think Estonia's X-roads initiative uses it in some neat and novel ways although that's not distributed.


Well, the flaw could be that a significant percentage of the difference may have been lost in energy and infrastructure costs - which are of little value now.

Bitcoin burnt a lot of energy for very little net value. One could argue that proving distributed consensus to be a viable tool in world trade was worth the cost.


There was probably a lot of money paying what is essentially slave labor digging up coal and turning it into hurricanes and floods along the way.


>Sirin Labs, for example, raised $158 million last year to create a mobile phone that allows consumers to trade and use crypto. The company, which will ship its first batch of a few thousand phones in December, is now considering abandoning hardware altogether and refocusing on shipping software for other phone makers to use, Chief Executive Moshe Hogeg said in an interview. Sirin now only has enough funds for six to 12 months of operations, he said.

Uh. Glad this bubble has popped. Of all the things I want in a phone, "trade and use crypto" isn't quite a requirement. Besides existing phones trade and use crypto quite well


Which phone (secure computing platform) do you trust to securely store your wallet key? All it takes to lose is an update to the wallet app that sends the key to a server.


Sounds like a perfect watering hole attack to make a "cryptocurrency phone".

Think of it like selling a mail-order gold bar cozy. 100% of your customers have a physical item that's vulnerable to crowbar enhanced recovery.


Definitely not the one made by some shitty startup with no track record.


You can install from an apk and not get updates.

Besides, if all you're doing is some kind of chain of authority you could do it through fdroid which enforces a constant key. No need for a standalone phone which will anyway have the same components as any other phone.


That sounds very reasonable, is there an equivalent chain of authority possible on iOS?


If I had to choose a phone, iPhone. I doubt they can build anything close to it in terms of security. Not that I would use any phone I have with me the majority of the time for it, but I doubt they can do better in that form factor.


IIRC, Apple was banning actual BTC wallets because they recognized BTC was a competitor to their App Model.

You could use BTC online wallets on Apple Phones, but it was difficult to find one where your iPhone itself stored the wallet.


Assuming everything goes as planned probably the Librem 5 when it comes out or anything that can run Replicant (or any other similar radio isolating fully open OS).


Aren't its baseband and wifi drivers still proprietary?


Why would you want the wallet with you at all times? How often are you transacting? Seems like more of a risk than a benefit here.


There's clearly a demand for people having their old-school credit card or equivalent on their phone and debitable wirelessly.

I personally find that more risk than benefit, but traditional banking's security mechanism seems adequate for many people.

If crypto currencies cannot offer the same level of convenience/security, then how can they compete in the mass market?


I can understand why one would not want such "features" in their phone. But I can't understand why someone would be glad something failed unless one is a competitor of the failing company.


It's inefficient for capital to be spent in useless projects. I'd rather that kind of money go to startups actually building useful things or at least trying to build something that people actually want


most of these bankruptcies are due to firms holding reserves in crypto. I don't think all companies combined spent that much of resources on employees in recent years, and most of the lost money is due to plummeted market, and that means that someone else got these resources to deploy more efficiently. so not all is lost in waste human work (if we would agree that it is indeed waste human work, which I personally do not agree with)

also, all that money spent on human work ended up in someones else pocket to spend further. In a way it is a "bitcoin tax on capitalist (or wanna be capitalists)"


Crypto being in a bubble meant a lot of capital pouring into crypto that would otherwise have had more productive uses.

>also, all that money spent on human work ended up in someones else pocket to spend further.

Broken window fallacy. There is no benefit from useless jobs. They are strictly worse than non-useless jobs.


There is certainly an opportunity cost related to all these bankruptcies - I agree with that. But without someone trying it, we would not know it would fail. So in a way, it is a valuable result as well. (and no, I do not believe someone can have perfect vision to know 100% one use of capital is right and another one is not - this is part of the process - trying and failing or succeeding)


I think I could have told you $158 million to create a crypto phone was a waste. Like I said - glad the bubble is popping.


And I would not believe you until I saw this failure proving me wrong :)


The energy use / ecological impact of crypto makes it nothing short of unethical.


much of ideas behind bitcoin itself was to replace traditional financial system. and traditional financial system is not zero energy use industry. in fact it uses a lot of energy. rough comparison from 2017 - https://hackernoon.com/the-bitcoin-vs-visa-electricity-consu...

granted - having both traditional and crypto financial system at the same time is net negative, but we can't really switch one on and another off instantly.


I mean, you can drive a Bugatti Chiron 500km for the same amount of energy as a single bitcoin transaction. The cost of a single transaction using e.g. visa is utterly negligible in comparison.

Edit: Some truly depressing figures here [1] including this

> Number of U.S. households powered for 1 day by the electricity consumed for a single transaction: 16.54

[1] https://digiconomist.net/bitcoin-energy-consumption


the author is making a point about the comparison to a transaction on a visa network. transaction on a visa network cannot happen without the rest of the traditional financial industry. I think the closest blockchain tech to a visa network will be lighting network, which is still WIP.

EDIT: Lightning Network potentially will be able to process much-much more transactions per second than visa network with the same usage of underlying bitcoin blockchain. Essentially Lighting Network allows you to create easily scalable and distributed version of visa network.


It could use vastly less power. The power consumption is a result of so many miners raising the difficulty. Lower difficulty == lower power use.


more difficulty is better - more protected network is. where efficiency will come from is better mining hardware and introduction mass adoption of the lightning network.


Do you guys literally not understand how the network works?


It isn't a requirement for you. Fortunately that's now how products are made because really we only need some mosquito nets in Africa and drinking water, everything else is a luxury for someone.


I was watching something on youtube recently that brought back memories of the early days of the internet and the campaign to discredit it (it will bring smut directly into your home... it will be all over in 5 years..) and now I see HN users glee with the failure of fellow engineers and entrepreneurs and the same campaign (it's a scam, it will bring drugs directly into your home...).

The bear market has been brutal and some very good teams were caught off guard because they lack to experience and know-how to balance a treasury or keep a startup alive. Many of us here are also equally unqualified to succeed though.

In the aftermath of the 99 crash, Amazon shares were trading for a few dollars and so were many other companies that today are huge monopolies. I believe that many of the blockchain native companies that survive this crash likely have the same growth.


The problem with your argument is that blockchain isn’t comparable to the internet. It’s an energy inefficient immutable public ledger. There just aren’t many, if any, applications that require an immutable public ledger, or that derive any benefit from using one.

Some blockchains allow smart contracts. Smart contracts sound like a nice idea, but when you think about potential use cases, you quickly realise they actually have no utility. Any application for a smart contract requires information from outside the blockchain which must be supplied by a trusted authority. This being the case, why bother with blockchain at all?


The only application for smart contracts I can think of involves trusted public data sources. For instance government published satellite imagery, public stock market indicators, government published socio-economic data.

For instance you might have a company that's looking to reforest an area and you can have a smart contract that takes donations and sends them to the company if some image recognition software scans satellite images and sees the area being reforested(lots of technical complications there).

Or you might have a company that's looking to reduce some poverty indicators in a given city and the smart contract is controlled by statistics published by the local city(though it's not clear government statistics are released frequently enough for this to work, at least they are reasonably trustworthy in developed nations).

Now, why do these types of contracts need to live on the blockchain? Ehhhh. But there's certainly a case to be made for smart contracts, in general as more and more real world information is digitally published in real time.


Yes, but as you point out, those applications don’t need a blockchain to be involved. You’re just running an app somewhere that takes in data and transfers funds held in escrow.

I agree that there may be uses for that kind of automation, but probably you’re going to want human oversight and ability to intervene, and blockchain actually hinders that.


The blockchain = internet is a grand claim but so is the assumption of little utility. People forget how horribly inefficient and unethical current economic tools are. Crypto-plebs seem to completely undervalue blockchains ethical potential. Both the pro- and anti- proponents are moving sideways throwing the same memes back and forth at each other. Maybe engineers will eventually focus on the stateless ethical proposition again someday, maybe they never will and stagnation will become the constant.


> People forget how horribly inefficient and unethical current economic tools are. Crypto-plebs seem to completely undervalue blockchains ethical potential.

> Both the pro- and anti- proponents are moving sideways throwing the same memes back and forth at each other.

Oh the irony.

Btw it's funny how you have written this back to back without flinching.


“Ledger” was just the first app we worked out how to do as a blockchain.

There will be more, but the design process is hard. The reason Ledger was cracked first is because ledgers are pretty simple.

Saying blockchain is “just a ledger” is like saying the web is “just a bunch of nerds uploading documents about their hobbies”. That’s where it started but after many years we learned to solve other problems with the same ideas.


Your argument doesn't even make sense. The blockchain is just a ledger. A really inefficient one, at that. It has to be inefficient because otherwise it loses all the attributes that make it desirable to certain markets. Take that inefficiency and you lose all that "trustless" "byzantine generals whatever" crap and you are left with git or hell, a real database.

Face it. Blockchain is going nowhere. It was stillborn the day it was created. It's had 10 years and nothing about it has fundamentally changed (as many bitcoin advocates love to point out as if it was a positive thing).

Normal people who say "yeah, blockchain might have a use" are just being polite. They don't want to state the obvious. Beyond its current use case as a magnet for scams, fraud, pump & dumps and get rich quick schemes there is no use for the blockchain at all.


> It's had 10 years and nothing about it has fundamentally changed

The usecase is censorship resistant financial transactions.

It is working right now, for people in Venezuela, for example. It is working for people who are attempting to make financial transactions, across the world, quickly and cheaply.

Tell me a better way to make censorship resistant financial transactions, over the internet, if you think this is useless.


A blockchain, by definition, is a chain of blocks cryptographically proven to be in a certain order, and only appended to or over-written by a majority vote.

A ledger is all it is, not an "app".


Anything that can be asserted without evidence can be dismissed without evidence.


Claim:

Many games can be implemented as a blockchain

Evidence:

Ledgers have been implemented as a blockchain

There you go. Now the burden is on you to provide evidence that it’s impossible for any game other than a ledger to be implemented as a blockchain.


Wow.

I'm sorry to be snarky but if this level of reasoning is representative of the cryptocurrency community then there's a reason it's failing.


:(

That’s pretty mean. I tried to engage your criticism in good faith, and you’re treating me like I’m too dumb to even talk to.

Feels bad.


Sorry, but I don’t think I can engage meaningfully if you expect me to prove a negative for the claim that you are making. That’s either a logical error or an attempt to make me do all the work, and the ‘claim’ ‘evidence’ part of your post doesn’t make sense.


With due respect mate but you say that blockchain isn't comparable to the internet because you say so, and I say it is because that's what I work on.... How are we to move forward?

Should we have a discussion on what the internet is and what blockchain is? I mean, you define a blockchain by its ledger component while I believe that's only a small part of it...


You could have started by putting forward an argument in support of your position, rather than an appeal to your personal authority.


I see your point about argument to personal authority, my bad, but what I am saying is that I see your argument as being too far off my experience, and it would be very hard to reconcile our views.


Beanie Babies and housing both saw significant bubbles. But housing and the stock market have mechanics that push recovery. Crypto however is closer to the Beanie Babies model where it might come back, but people will continue to hype it either way.


Plus, even Beanie Babies have some intrinsic value as toys. Housing far more, as shelter. Cryptocurrencies’ value is entirely extrinsic, as far as I can tell; it doesn’t have a nonzero lower bound built in.


Depends on the valuation models used. There's no accepted standard yet.

The way I value currencies, the size of the network and the number of projects built on top of it is what matters and in that view Ethereum and Bitcoin are definitely worth much more that their current fx price.


There is only one valuation principle in finance. It's present value of future cash flows. All other methods are approximations or this


I think the "cash" part is the confusing sticking part here. What currency is that in? Cash is also a position? Discounted for inflation, deflation etc. The framing of the valuation model is confined to the context of the monetary system it is within. Ie - assuming with an inflationary monetary system, I have $x cash. Where can I allocate it (at what valuation) such that I can generate a greater yield - all monetary policy implications considered.


Nope, because you can transfer between cash systems. Outsized examples to prove a point.

If Bitcoin’s are worth 1 cent each then cash flows in USD can also turn into large Bitcoin cash flows. But, Bitcoin cash flows could not turn into large USD cash flows.

Further, if Bitcoin’s value is dropping at say 15% per year then loaning them out at 10% per year is losing money vs converting them to USD, and doing nothing.


You have completely not understood anything I have written, and your example makes zero sense. Pointing out the flaws it what I can make of it - you are talking about currency conversion (this is two different monetary systems and cash positions in both). Second, your example is again talking about 2 different systems and by that metric, everybody has been losing money during the equities bull market because Bitcoin has outperformed the S and P every year bar 2, and when looking at raw purchasing power, still has outperformed even after an 85% crash. Obviously this is stupid, because in the context of the monetary system those investments were made, Apple and Tesla have done fine.


Bitcon has on net lost money every year after it was created through mining. People spend money mining, and add money to the system but the only way to extract money is for someone else to buy in. You can do a silly calculation and say if we could find a magical buyer then the net gain is their increase in price, but there is not such magical buyer which is why it's been tanking.

The core problem is Bitcoins are not a productive asset. They can't produce any cash flows.


Does cash produce cashflows? No, it doesn't - yet you would have been better off holding cash than Nvidia this year. (Note - Nvidia has cashflows and pays dividends!)


Without converting to the same currency it’s not obvious. Which is why you are taxed when an asset is sold, until then it’s purely theoretically valuable.

Suppose you sell it in six months or sixty years. Then, you can compare USD to USD and say it was a good or bad investment. Alternatively, you could say you wished you had waited a year to buy the stock.

This is important for bitcoin as you have people that buy in and have yet to sell and can’t yet say if they made a good or bad investment for them. However, with dividend stocks you can hit the point where dividends are greater than total investments thus even if nobody ever sells becase it fails the company was still a positive net investment across all investors even if some lost money.

Long story short it’s possible for companies to a net positive investment, it is not possible for Bitcoin to be. If it’s value hits 0$ then you look at all the investments and people spent X buying it, payed Y keeping the network running, and made X - Y selling it which must be less than X.

TLDR: Individials can make money in the lottery, from perymid schemes, or from Bitcoin, but on net they are all poor investments.


Yet people buy stocks that pay no dividends all the time, and often do very well because these companies create value.

Your last statement is interesting because you use the term "money" yet I'm not sure you have questioned the nature of the "money" you are making with your investments. If you imagine yourself in a glass bead economy, and you replace all of your notions of money with glass beads. You are making your investments with glass beads and making net positive glass bead investments from dividends. This is all fine in your glass bead economy. However, the day that the Venetians come with technology to make glass beads, they will subtly buy up all of your wealth because you chose a poor for of money - that you were making so much of with your investments.

https://en.wikipedia.org/wiki/Trade_beads

Alternatively, Bitcoin could be the trade beads (despite the fact they are disinflationary), but the point is the same about the assumptions being confined to the context of a single economy and currency.


Dividends come in multiple forms, buybacks for example return money to investors. Companies aloso get sold returning money to investors. However, if a company never returns money and eventually folds then on net it was a bad investment even if some people made money they made money from other people not the company.

That’s the Bitcoin model. If you want to use Bitcoins as your money then it’s even more obvious. If I sell 10 bitcoins to somone they get 9.99999 of them and miners get that .00001 or whatever bitcoin. Wait 1000 years an they are still our that .00001 or whatever coin.

Miners also got coins from the original 2.1 Million but rather than pay people they payed overhead spending electricity and depreciation on hardware. That money is simply gone never to be recovered. Sure, they can sell coins to other people, but that money is new investments.

PS: Bitcoin as a useful service is fine, people lose money to Visa every day but trade that money for other forms of utility.


I think you are confusing equities with mediums of exchange. The mechanism of value creation is different. One facilitates trade and solves the coincidence of wants. The other generates a yield.


Bitcoin has also clearly failed as a medium of exchange, but I rarely see people try and defend that.

It’s talk of Bitcoin as an investment that is more troubling. You can make money buying gold or whatever at the right time, but it’s a hedge not an investment. Holding gold has real costs and their is no dividend just the next buyer.


I’d agree with that. It’s an investment in the sense of currency speculation (which is a bit of a big bet now at this size it’s a fairly legitimate currency). It is really just a hedge and a cash position, and maybe part protest, not so much an investment. Store of value.... maybe.

I don’t think it has failed as a medium of exchange though. I used it yesterday as one. That said, it hasn’t filled as niches there, specifically the major ones.


How about VCs? Don't they fund projects based on future value?


VCs also use projected future cash flows or as the previous commenter said, an approximation of such.


So how do you value open-source "commons"?

ICOs were created precisely because these projects aren't supposed to generate profit.


I think most were designed to create a profit for at least one party...


Sure, but in which concrete cases, and how was it somehow morally reprehensible to seek compensation for open-source work?


Serious question: do you have a personal financial or professional stake in blockchain that may be colouring your view?


I'm a professional blockchain architect and before I worked in Fintech for 20 years. Most of my views are definitely impacted by my own experiences.


Then does the bias you assume others to have not apply equally to you? It doesn’t matter what arguments are made here, if you’re all-in on blockchain you’re not going to listen to any of them. Also, how do you account for such scepticism from the community? Do you think everyone just irrationally hates new technology? Given where we are that seems unlikely.


I do tend to change my opinions when presented with new evidence and took my time to go "all in"into blockchain professionally because I thought it was not going to last and in any case it was mostly a solution to a problem I was being paid to solve with other technology... Bitcoin was my enemy!

I take HN user's reaction to Web3 to be within expectations for any revolutionary technology. If von Neuman criticised FORTRAN for being too high-level and not needed for serious computer science and IBM failed at capturing the web, Warren Buffet didn't invest in Microsoft, Apple or Google, then this to me suggests that the bigger the paradigm shift, the more those who created or benefit from the status quo will fight it. It's my belief that the web as we know it was developed without security or privacy in consideration and that this is the ultimate reason why we have the current "surveillance economy" and the cyber risks affecting people, businesses and nation states and that the Web3 will offer a cryptography-first alternative within the next two years.

We could go through my comment history and you'll see that for the most part I try to share my knowledge and experience in a positive way and never assume others are irrational, but a few interactions were generally negative. I do get a gut reaction to comments that insinuate my line of work benefits criminals, for instance, and lashed out once or twice at terrible articles or blogs that were shared here and were taken as authoritative when in fact they were complete nonsense for anyone _working_ in the space. I regret those but won't delete them. This is my work and I sustain a family with it so yes I am biased but not uninformed or incapable of learning new facts.

More broadly, I'm familiar with how trends work and some aspects of the blockchain community can be off putting and the technology itself is often misrepresented as simply a "distributed ledger" but I'm also confident that anyone who cares enough to try and join a developer focused meetup (Ethereum!) or event will see the side that I try my best to represent.


> Depends on the valuation models used. There's no accepted standard yet.

Ten years and you still have no accepted standard for valuation. Hmmm.... what does that tell you about the entire space?


The lack of widely accepted valuation models is probably a major contributing factor in the dramatic decline in prices...


I'd say that widely accepted valuation models are probably a major contributing factor in the dramatic decline in prices...


I'm going to take the time to respond to you because you were the first reply to my comment.

Beanie Babies are collectibles, cryptocurrencies are money. Both have had bubbles but only one of them is tied to a brand name and there have been plenty of great new collectibles that have taken its place since.

Cryptocurrencies on the other hand are a new solution to a new problem (digital native representation of value) and even if the current offer isn't perfect their development hasn't stoped or even slowed down in any considerable way and there's no reason to believe we won't continue to grow and make better products and solutions. Money isn't going away anytime soon.


"Beanie Babies are collectibles, cryptocurrencies are money."

It's been established over and over again that cryptocurrencies are not money. They are a collectible like Beanie Babies. Cryptocurrencies vary too much in value to be used as money. Would you go into a Starbucks and spend $4 USD dollars to buy a coffee, if there was a chance that the $4 might gain 10,000% in value over the next year? Of course not.

There have been dozens of good articles over the last two years comparing money to cryptocurrencies and detailing all of the differences. If you still don't understand the differences, at the end of 2018, then you are keeping yourself willfully misinformed, and I suspect no comment on Hacker News will be able to change your mind.


>t's been established over and over again that cryptocurrencies are not money.

Sorry but that's not true. You may be confusing "money" with "currency" though.

There's at least one US state that allows paying taxes in cryptocurrencies and there are a few countries here in Europe where cryptos are legal tender.


[citation needed]



Do you have any references to support the claim that bitcoin is legal tender?

Legal tender must be accepted to extinguish a debt, by any party.

Just because bitcoin is not illegal doesn't make it legal tender. It may be used if all parties agree.

I understand the first link you gave says that Germany accepts Bitcoin as legal tender, but that is from a misunderstanding of what legal tender is. German vendors are within their rights to refuse it and insist upon real legal tender.


You're just going to run into loads of people who don't understand what "legal tender" is and, when you explain it, will insist that you must be wrong because they've heard that phrase and attached a different meaning (generally: a vaguely positive aura plus "it's money")

For those reading along, a useful baseline to get you straight on legal tender is in countries where fiat currencies are just broadly assumed to be valuable any legal tender laws are basically just ornamentation. Scotland, for example, doesn't have any bank notes as legal tender, just some old coins. Nobody in Scotland doubts that the notes they have are valuable, but its laws don't bother explicitly privileging this as "legal tender". Nevertheless if you get on a bus in Edinburgh with a goose and some shiny rocks and try to barter, well, you'll be lucky if the other passengers let you back off in one piece, let alone to get an actual ride. "Exact cash fare only".


>Do you have any references to support the claim that bitcoin is legal tender?

Yes I have linked to it.

edit: In German: https://www.scribd.com/document/372651554/2018-02-27-Umsatzs...


No, you've linked to something that says it is OK to use it. You are misunderstanding what legal tender is.

The European Commission says [1]:

"Within the euro area, only the euro has the status of legal tender."

"Yet...contractual parties are free to use...virtual currency schemes (e.g. Bitcoin). Although these are not official currencies and have no legal tender status, parties can agree to use them".

Germany has not made Bitcoin legal tender. Don't fool yourself.

[1] https://ec.europa.eu/info/business-economy-euro/euro-area/eu...


Within the Euro area only the Euro has the status of legal tender but businesses settle in USD all the time.

The link I provided is jurisprudence in Germany but it doesn't impact the whole of the EU. Malta might soon join though.


If you want HN and other people to take Bitcoin seriously, it's in your interests not to make false or inaccurate claims.

If there are "a few countries here in Europe where cryptos are legal tender" then this is a big deal and you need to provide a reference.

Otherwise you just come across badly. Terms are important.


The German source you provided explicitly states that it is not legal tender, but "just" treated similarly as other currencies: buying bitcoin is recognized as exchanging other currencies, it can be used similarly in contracts, ...


Can you tell me where? I must have honestly missed it and so must have all the other people who think this https://www.theguardian.com/technology/2013/aug/19/bitcoin-u... is true.


The Guardian article doesn't say it is legal tender either. Legal tender has a very specific meaning.

The German source says that for some purposes it is "treated equally to legal tender" and that "exchanging virtual currencies to legal tender and back is tax free". Neither statement makes sense if it were legal tender.

Its status for some purposes is similar to that of other non-Euro currencies (e.g. contracts between private parties agreeing on it etc), none of which are legal tender in Germany.


Ok that difference makes sense, thank you for the explanation.

Bitcoin and other cryptocurrencies are treated equally to legal tender in Germany.


> Bitcoin and other cryptocurrencies are treated equally to legal tender in Germany

I’m sceptical that you spent 20 years in fintech without learning the definition of legal tender.

If you go to a restaurant, eat your meal (thereby accumulating a debt) and slap legal tender on the table, the restaurant must accept it. They may also accept other things, like Visa credit cards or Ethereum. But they aren’t obligated to. The former is legal tender. The latter is a way to pay. Obligations around settling debt are the sole defining characteristic of legal tender, so it doesn’t make any sense to say one thing is “treated equally” to legal tender if it lacks this core characteristic.


I'm familiar with the definition but I learned today that I was mistaken in the translation. The articles I had previously read and linked said bitcoin was legal tender but the actual legal document provides a slightly but importantly different definition.

If you travel abroad you may have to exchange your currency to pay for a meal, because your coin is not treated equality to legal tender locally, and the defining characteristic is that it settles the debt at the time of exchange. I believe that's a function that cryptocurrencies fulfil by design and if the court states they are to be treated equally to legal tender that seems to prove my point.


In UK, Scotland is issuing it's own fiat money that is not a legal tender. See here https://www.scotbanks.org.uk/banknotes/legal-position.html


The german article just regulates sales / value added tax IF you do business in bitcoin. It nowhere states that bitcoin et. al MUST be accepted as a means of payment.


Thanks!


> Cryptocurrencies on the other hand are a new solution to a new problem (digital native representation of value)

I'll bite. "Digital native representation of value" isn't a problem, it's a solution. Cryptocurrencies are a medium of facilitating that solution. No one would think to themselves, "I have a problem: I need a digital-first store of value or currency, now how can I do this?"

Instead they might think to themselves, "I have a problem: I need to do <thing>; this can probably be accomplished if I use a digital-first store of value." I don't see why you would care about how your money or asset is being represented unless you have another problem that forces you think about it.

With that out of the way, this leads me to my actual point - what is an actual problem you see being solved by a "digital native representation of value"? For example, a common one I see a lot is distrust of governments due to control or censorship.


>'ll bite. "Digital native representation of value" isn't a problem, it's a solution. Cryptocurrencies are a medium of facilitating that solution. No one would think to themselves, "I have a problem: I need a digital-first store of value or currency, now how can I do this?"

How about HTTP 402?

https://en.wikipedia.org/wiki/List_of_HTTP_status_codes#4xx_...


How is a status code that almost nobody uses a problem.

Randomly posting a quote and a link is not discussion, nor is it an argument.


Well no one actually uses that status code... because there was no solution to guarantee that a digital payment is ever truly "done" until Bitcoin was invented.

I posted a link that people who are familiar with the development of the internet and HTTP will remember that there was a big problem back then.. we didn't have a digital native representation of value and all digital data structures can easily be copied so the fear of double-spends is what caused Digicash, Bitgold and a few other earlier digital currencies fail.


It's still a solution in search of a problem. In a marketplace, there are two fundamental fears to be addressed: the seller's fear that the customer will not pay the money for the goods, and the customer's fear that the seller will not actually provide the goods. The classic solution to this problem is escrow, where the seller and the customer both agree on a trusted third party who will hold the customer's money until the seller delivers the goods.

In modern times, credit cards and the like provide an adequate solution the problem (there's definitely strong dislike over things like fees, though). Early digital currencies failed because they weren't trustworthy as third parties, or they failed to gain a wide enough userbase to keep fees low. But it's not like they all failed--PayPal is with us today. Bitcoin and other cryptocurrencies suffer as a payment method in that they don't solve the customer's problem, particularly in cases like ransomware where there is strong reason to doubt the seller's ability to deliver.


I see it as an alternative to the current web tech stack that in my opinion isn't very secure and won't scale to match a machine-to-machine economy and that unfortunately can, and in some countries is used to monitor us.


> because there was no solution to guarantee that a digital payment is ever truly "done" until Bitcoin was invented.

Except blockchain based currency can't solve the "402 problem" as you call it. They are far to expensive and would never scale to the transaction volume required.

And if you are going to say "oh yeah well Lightning Network will save us!". Lightning Network is the biggest pile of vaporware I've ever heard of. It's been "just around the corner" to save bitcoin for almost as long as bitcoin has been a thing. ...I do love the solution to scaling the blockchain is to not use it--a real ringing endorsement of Satoshi's Glorious Block Chain if I ever heard one!


Which blockchain are you talking about? Most have probabilistic finality within seconds and CC transactions can take weeks to clear for the merchant.


"Cryptocurrencies on the other hand are a new solution to a new problem"

The solution may be new but the problem is not at all new. The first solution to that problem was proposed in the 1980s and there is a large body of academic work on cryptographic approaches that preceded Bitcoin.


I'm not saying that crypto is a scam, but the most common sales pitch for pump and dump salespeople is to liken their investment to the early dot com era.

"Company X looks exactly like Amazon when they only sold books."

"Company Y is like an early Google, but with a larger addressable market."

If you want us to believe crypto will be like the internet, support that belief with real evidence. But don't uses these cheap FOMO tricks to manipulate people into buying in. Tell us why "many of the blockchain native companies that survive this crash likely have the same growth."


I never claimed any company looked like amazon or google, only that the bear market has affected us similarly to how the 99 crash affected the .com companies.


The "internet" was useful from conception. It was created through purpose to connect remote locations and share information, and has only exploded in utility since then.

What has the crypto industry actually done other than replicate some basic currency transfers through a highly inefficient and unintuitive trade of virtual points? It's a great research concept but it had no purpose in its creation, and finding some utility to bolt on top has so far proven to be futile in practicality and feasibility.


>The "internet" was useful from conception.

It was useful but it was not understood to be useful by a large majority of people.

The crypto industry has developed novel crowdsourcing (ICOs, DAICOs, etc), fungible and non-fungible tokens, transparent voting mechanisms, token curated registries, oracles, prediction markets, state-channels, distributed time service, Zero Knowledge cryptography, leaderless consensus in distributed systems, fraud proofs, algorithmic stablecoins and a lot more.


We're discussing cryptocurrencies, not cryptography. Prediction markets (called options or futures) have existed for a very long time and many other things you list are not related.

We're also discussing whether it is actually useful or not, not whether it is widely understood to be (which depends on it being useful first). So the question remains, what utility do cryptocurrencies provide so far?


There's some controversy on whether this is a bug or a feature, but cryptos have enabled a lot of drug trade, ransomware, and all sorts of other crime to happen at an unprecedented level of anonymity.

I have a feeling there will be a steady demand for this in the future, but I'm not sure how the bitcoin <-> fiat exchanges are going to avoid government attention.


Amazon was able to survive as they still making money (in fact they grew their income) - people never stopped buying books online.


BS. Amazon operated at a loss until very recently and people were NOT buying books online because on-line payments only existed in a hand full of countries and the tech itself was immensely immature.


That's confusing profit and revenue. Operating at a loss while your market share and total income is growing and you are building out infrastructure and investing in new technologies is not remotely the same thing as insolvency. No, Amazon wasn't putting money in the bank in 1999-01. Any dummy could look at their business model and say "Yup, there's a big market for selling junk on the internet".

With this blockchain startups, where's the equivalent? They never made any revenue. They never had a real market. What money they did make was predicated entirely on the continued solvency of the existing coin markets.


Ripple and Stellar are working on disrupting financial industries: instant and cheap money transfers. So they are creating value for their users. How they, Stellar and Ripple, are making money is not clear to me though. I know IBM will be making money out of using Stellar for sure.


It's true that the most successful cryptocurrencies doesn't generate revenue to any _one_ business, but that's because it is open source and the tokens themselves are sold on secondary markets, not by the developers themselves.


You are playing games with words. Amazon was making money in the sense that everything they sold had healthy margins. They lost money only because Jeff Bezos believed in the future and continued to invest heavily in the future. He could have stopped investing and taken profits at any moment that he wanted to. But he wanted to keep going and build something bigger than what he had.

Cryptocurrencies don't compare.


>You are playing games with words. Amazon was making money in the sense that everything they sold had healthy margins.

You got to be kidding me. Even today Amazon sells by undercutting profit margins from competitors!


That is absolutely irrelevant in every respect. Company A has costs of $10 and sells at $15. Company B has costs of $8 and sells at $11. Company B has undercut Company A. Company B still has a healthy margin on what it sells.


The op claimed that Amazon operates with healthy profit margins which isn't really the case... "your margin is my opportunity"


Amazon has pretty incredible margins as a business. They invest the profit margin into new ventures and growth.


Amazon has very good margins, what are you talking about? They bring in tons of cash every quarter.


Amazon MADE A CHOICE to operate at a loss. They did so because they invested everything back into the business to grow. Their loss was not because they didn't have sales or because they were giving their products away for free at a discount, but because of investment towards future growth. As can be seen, they went from a bookstore, to an ecommerce platform, to having shipping logistics, streaming service, cloud provider, etc.


I'm not sure why you believe we are disagreeing.

They chose to operate at a loss because they couldn't generate enough business to do anything different. Their shareholders wouldn't have allowed for it otherwise.


No, they chose to operate at a loss because they wanted to continue investing their positive margins from the large amounts of business they were doing back into building infrastructure so they could do even more business.

Now name a single crypto currency start-up that is making able to even cover their own operating expenses, let alone invest their cash flow into growth.


Most crypto startups create open-source software and don't sell anything neither do they follow a for-profit business model so you are looking for the wrong thing in the wrong place.


Non-profit organizations are not "startups" by definition. A startup is a for-profit business oriented toward rapid growth. There's nothing wrong with founding a non-profit, it's just not a startup.


in that time period, Amazon both operated at a loss and made money.

Fun how that works.


Yes, it is sad how some glee from failures.

I will keep on working, crash or not, because I like what I do.


I think everyone can agree that cryptocurrency got way ahead of itself but HN almost seems Luddite in it's treatment of the underlying technology to the point that we are going to have our own "No wireless. Less space than a nomad. Lame." moment that people will link to for years to come.

The underlying technology is actually pretty worthwhile. Ethereum is providing a base layer protocol for apps that never go down, never fail, and are fully trusted. That's something that future generations will take for granted but HN is largely ignoring right now. Even Google goes down (sometimes once or twice a month). Take a moment to imagine a few of the things you could do better if you had 100% reliable hosting that was safe and private. And basically free. (Either the user pays a penny or two when using your app or you pay a penny or two for each user).

You wouldn't look at the internet in the early 90s and say it was useless because all it does is carry short messages on Usenet which take a while to appear. The tech was being improved. Those short pieces of messages evolved into images and then later video and now we have the internet of today. This isn't going to happen overnight but it's going to happen faster than the improvement of the internet since Ethereum is just software and no hardware needs to be rolled out.

Go ahead and ignore it right now. It's still building time. But don't assume it's useless or beanie babies. In a few years the layer 1 protocols will be good enough for something useful and I would bet that we see something truly unique come out of the blockchain space that we never before knew we needed.


> we are going to have our own "No wireless. Less space than a nomad. Lame." moment that people will link to for years to come.

That quote is a product of its time, and only seems foolish or misguided with the benefit of hindsight. There is no shame in skepticism, even if it ultimately ends up being incorrect (likewise I'd have no misgivings about making a wrong decision rationally). There is also an element of survivorship bias: many such quotes about things which did fail were wagered on similar amounts of information, but have since fallen into obscurity. I don't think it's fair to call the author of that quote a Luddite.

Speaking as someone well acquainted with the technicalities of distributed systems and cryptography, I am deeply skeptical of blockchain technology. I think the vast majority (but not all) of it is "lame"[1], for lack of a better word. I would happily accept being quoted for a decade or two if I'm wrong.

___________________________

1. I'm skeptical for reasons I'm not going to try to defend, because they've been rehashed on Hacker News over and over. The justifications will likely not convince anyone who remains unconvinced.


> That quote is a product of its time, and only seems foolish or misguided with the benefit of hindsight.

"Only"? There were top-level comments in that very thread [1] that pointed out why it was misguided and foolish. Hindsight is not the requirement that some want it to be.

1. https://slashdot.org/story/01/10/23/1816257/apple-releases-i...


Yet wireless and large capacity proved, in the long run, to be exactly what the market wanted and Apple had to incorporate those features into later iPods.


I think that’s sort of OP’s point. The criticisms that come up may be valid, but that doesn’t mean the whole enterprise is doomed.


The other thing is, something can be both lame and popular. Its popularity doesn't somehow magically erase its shortcomings.


The reverse can also be true. Zune for life.


I still think the Zune is a superior product. Great build quality, software layout was great and I think most people that put them side by side would agree. But network effects are very strong.


Network affects? For a stand-alone, non-networked MP3 player?


Bandwagon effect would be a more apt description.


Also the success of the iPod want a product of only the iPod but also of iTunes (store)


Disclaimer: I've co-founded a company building cryptographic protocols for existing cryptocurrencies. I'm also a cryptocurrency security researcher.

I believe in Bitcoin and the recent developments in both cryptography and distributed systems which are underlying many cryptocurrency projects. I think the skepticism of Hn is rational, valuable to the community and often correct. The cryptocurrency space is a great space to work in, but it requires a constant investment in skepticism and critical thought. I hope Hn always remains skeptical of technology.

> The underlying technology is actually pretty worthwhile. Ethereum is providing a base layer protocol for apps that never go down, never fail, and are fully trusted.

I disagree with this statement. Ethereum DApps can fail, Ethereum can be rendered unavailable via: scalability issues, forks, bugs or failures in the P2P network. Furthermore the additional infrastructure that many DApps rely on can fail as well. Ethereum is not a solution for achieving high-availability, high-availability is probably harder to achieve with a DApp. Ethereum is a solution for building and managing assets outside the control of a single party or company. This intentional loss of control comes with many costs and does not provide universal business benefits.


Well said. Decentralization does not magically give you reliability or high availability. Sometimes it is quite the opposite. It is still just a bunch of software running on a bunch of miscellaneous computers over an unreliable network.

To me there are strong parallels between the cryptocurrency boom and the previous P2P boom. P2P technology was exciting and super interesting, but people assumed that it would magically be the solution to a million problems just because the tech was awesome and decentralized. But that didn't happen, instead Netflix happened. Netflix found a way to solve the actual problems that people were having and at the end of the day the underlying technology didn't matter.

I expect to see something similar happen with a lot of the current crypto use cases. More centralized solutions like Amazon QLDB[1] will provide the majority of the benefits that people really need: a transparent, immutable, and cryptographically verifiable transaction log, while also being performant and highly available.

Many people see decentralization as the solution to all problems because it will finally make things fair, a level playing field for all. I just don't see it happening. Not because of some sinister world order trying to retain control, but simply because that is not how human interactions and trust tend to work. I think we can continue to move towards more decentralization, but it shouldn't be the end goal in and of itself and we should always be skeptical when there is more focus on that than there is on solving the problem at hand.

1. https://aws.amazon.com/qldb/


>Netflix found a way to solve the actual problems that people were having and at the end of the day the underlying technology didn't matter.

This, one thousand times this, it is always this. People have problems and they want solutions, they don't care about particular technology architectures.


To be fair p2p was, and still is, a better technical solution, and had it not been illegal, would probably have won.

(p2p wasn’t illegal, but what people wanted out of it was)


There are services that incorporate P2P (e.g., Spotify, and you can find others if you do some research). If you're writing closed-source software that operates on content that belongs to you (or that you've legally licensed) there's nothing preventing you from using peer-to-peer technologies in your stuff.

I can't believe that Netflix didn't seriously consider P2P. I imagine they didn't do it because there are issues with consuming limited upload bandwidth that doesn't belong to NF, and having poor control over the resulting complicated network flows and the ultimate customer experience (think about what your first customer service action for a customer having video quality issues would be).

No doubt there are many managers and system engineers who shy away from P2P because it's associated with bad actors. But there are sound reliability engineering and customer-facing reasons not to use it, too.


Didn’t Netflix start providing ISP level caching vis boxes? In any case if they didn’t this method would make P2P pointless as consumer peers would still route traffic back to their ISP, and in worst cases another consumer could be at another ISP network.


In this case it is a little stranger though. It seems that the problem is that the economic system is rigged against them, and their payment systems are spying on them. When the “solution” to this becomes evident it has been flowing to the participants in that economy. They then realize that Bitcoin was solving their monetary problem all along and the awakening happens - only when they rush to the solution it appears to be a mirage as the very act of them rushing on their realization turns into instant debt liberation for the long term participants. Then it all crumbles and they say it’s a scam and was never a solution. In reality, nothing really changed, and the slow crawl will continue for the long term participants.


I am genuinely interested what are those problems that decentralized apps and cryptocurrency solve? Anonymity of payments? Bitcoin is a shitty way to pay for anything and I want convenience first and most of the time I do not care about anonymity at all. Smart contracts? After 2008 there was talk about including Python code into contracts to codify distribution of gains in MBS’s. Pretty low tech and workable. Did not happen, because finance is still largely a business of relationships and trust.


>Anonymity of payments? Bitcoin is a shitty way to pay for anything and I want convenience first and most of the time I do not care about anonymity at all.

Unfortunately Bitcoin provides much less anonymity than cash or credit card payments. Bitcoin provides excellent censorship resistance, in that Bitcoin lets anyone who has Bitcoin send Bitcoin to anyone that wants Bitcoin (assuming of course internet access and fairly technical users). Additionally Bitcoin lets people custody Bitcoins like cash or gold and also lets those same users send Bitcoins digitally. This is a new development and something people couldn't do before. We are still in the early stages of seeing how people use this new capability. Check back in 20-100 years.

Smart contracts, especially legally enforceable smart contracts, have existed well before cryptocurrencies, however cryptocurrencies provide a fairly natural setting for them.

>Did not happen, because finance is still largely a business of relationships and trust.

Relationships and trust mean a high cost of doing business, both because trust is expensive and because relationships are not able to be automated. Cryptocurrencies and smart contracts offer a technical substitute for trust. This substitute is not good in all cases and has some serious tradeoffs. However there are some areas in which it is a clear improvement.


I agree that cash is better for anonymous transactions ... Sometimes. But I don't follow that credit cards are more anonymous that Bitcoin.

You generally have to give up your ssn and lots of private data to get a credit card. Your name is tied to it.

Cash is great, but does require you or someone to physically deliver it.

But crypto can be laundered through a mixing service over a tor connection and when done properly and carefully, would be essentially untraceable.


>But I don't follow that credit cards are more anonymous that Bitcoin.

Credit card transactions are private between you, the merchant, the processor and your bank and anyone those parties sell your data to. Whereas Bitcoin transactions are recorded on a public immutable ledger.

>But crypto can be laundered through a mixing service over a tor connection and when done properly and carefully, would be essentially untraceable.

You can certainly obfuscate Bitcoin transactions. I even wrote a tumbling protocol for Bitcoin[0] and have been involved with other cryptocurrency privacy projects. I believe that cryptocurrencies can achieve a high degree of privacy, but we aren't there yet.

Note you can do similar things to make credit card payments more privacy. For instance by buying and trading gift cards or store credits.

At the end of the day if you buy physical goods online you have to have them delivered to your house, drop site or PO box. That means giving out a physical address which greatly reduces your anonymity.

[0]: https://eprint.iacr.org/2016/575.pdf


> Bitcoin is a shitty way to pay for anything and I want convenience first and most of the time I do not care about anonymity at all.

As a side comment, just two hours ago I paid an IPTV service with BTC using coinpayments.net and it was easy (scan QR code and click send) and quite fast (at first I was going to pay for BCH because usually it is faster, but I only had BTC in my wallet).

Really cool as payments technology if you tell me.


> I am genuinely interested what are those problems that decentralized apps and cryptocurrency solve?

Censorship resistant, electronic, financial transactions.

You can make an electronic payment to anyone, and nobody is going to stop you. No transactions are currently being censored on most of the big crypto platforms, so we have provable evidence that it works for this usecase right now.


Thank you. So, electronic financial transactions is a problem already solved by other means (and much better at that). Censorship - I totally recognize my first world privilege - what are the contexts in which this is relevant? Even if payment censorship problem is somehow solved, the delivery of goods and services can still be blocked, be it by customs or firewalls.


> Bitcoin is a shitty way to pay for anything

I think following the reasoning of many BTC optimists, your quote is equivalent to saying "PPP (the one in OSI layer 2) is a shitty way to have globally distributed, secured real-time chats"


If people end up really wanting something like asset management that's not in the hands of a middleman, of course your Netflix and Amazon examples don't apply.


People want fast, cheap, easy ways to move money. Most don't particularly care whether or not a middleman is involved. They just want the job to get done and they want it to be simple.


I cannot find a good analogy, but I am starting to look at Ethereum as a really good proof of concept, but one that probably won't survive. I cannot put my finger on exactly why, but I am starting to feel like nothing will survive that is not built on Bitcoin itself.


Some projects will die in this during this current crash. The most likely force to kill off projects will be:

1. lack of developers to adapt to cheap 51% attacks,

2. cheap 51% attacks will lead to those coins getting delisted from exchanges since attacks will cheat exchanges via 51% double spending attacks (something which has happened a few times already)

3. With no ability for people to safely buy or sell coins those coins will die.

I don't think this will happen to BTC or ETH. I think Ethereum will look very different in 5-10 years.


BTC may survive, but ETH is down more than 90% and it's not looking good.[1]

[1] https://coinmarketcap.com/currencies/ethereum/


It is counter-intuitive but 90% drops in the price of a cryptocurrency don't result in that cryptocurrency dying. What kills a cryptocurrency is exchanges delisting it and/or having no developers. Price decreases are unlikely to directly cause either of these to happen to Ethereum.


Isnt the price reduction what can lead to the 51% attack?


there's no pressing need for ethereum, it's a cool experiment but it's much less efficient than the centralized databases that power 99.9% of the worlds computing needs today. it will die from lack of use once the hype and funding runs out. bitcoin will survive because people actually use it to evade currency control laws and launder money. not to mention traders will keep it alive as an alternative asset and good source of volatility


Bitcoin will just die. The problem wit pretending it's an asset is you're doing exactly that - pretending. When you hold stocks you hold actual ownership of a productive corporation, when you hold bonds you hold repayment promises from productive corporations or governments which can tax their citizens etc.

When you hold Bitcoin...you don't hold anything which can convert into something useful at the end of the day - you hold the useless result of expended computing power. A bitcoin isn't a password which unlocks anything, it doesn't convert back into computing power - it can't do anything into the future.


What do you hold when you hold USD in a bank account? The best argument I've heard for the value of USD is:

1. is that you can pay your US federal and state taxes in USD

2. and many companies and individuals will accept USD in trade for goods and services.

Measuring BTC by that same rule you'll find:

1. You can pay your Ohio state taxes in Bitcoin [0],

2. and you can trade BTC (Bitcoin) for some goods and services (overstock for example).

Thus if USD has value by the measure above than BTC must share some of that value. The value of BTC might be significantly smaller than USD but it must be non-zero.

>When you hold stocks you hold actual ownership of a productive corporation

Not every company is productive. The stock is worth what someone is willing to pay for it now or at some future point. Companies have issued stock as cryptocurrency tokens.

>When you hold Bitcoin...you don't hold anything which can convert into something useful at the end of the day - you hold the useless result of expended computing power

You raise an interesting point here. Should currencies have a use other than being a medium of exchange? For example you can burn paper money to generate heat or melt down coinage into useful metals. Does having that property make paper money or physical coins better as a currency? Goldbugs would say yes, I'm less sure.

[0]: https://www.wsj.com/articles/pay-taxes-with-bitcoin-ohio-say...


You can’t actually pay your Ohio state taxes with BTC. They convert immediately to USD when you pay with BTC. If it didn’t convert, you can bet they would not accept BTC.


>>1. is that you can pay your US federal and state taxes in USD

>>2. and many companies and individuals will accept USD in trade for goods and services.

First of all to have USD someone needed to borrow it first and they need to return it. The USD you hold is useful for someone else to pay their debt back. This is much more important than taxes.

>>Thus if USD has value by the measure above than BTC must share some of that value.

No, the reasoning is based on missing the point of fiat currency: someone else owns USD to the central authority with a lot of power.

>>For example you can burn paper money to generate heat or melt down coinage into useful metals. Does having that property make paper money or physical coins better as a currency? Goldbugs would say yes, I'm less sure.

The point is that USD represents someone's debt. They will need to come up with goods/services to pay that debt back if they don't currently own enough USD. BTC represents wasted power and its only value is a hope someone wants to accept it as payment even though no one really needs to (unlike USD).


> First of all to have USD someone needed to borrow it first and they need to return it.

This is a novel concept to me - could you please elaborate on that or provide suitable search keywords?


Look up "Credit theory of money".


Thanks!


I don't hold any bitcoin or cryptocurrency and am a crypto skeptic in general but isn't this argument commonly rebutted with the comparison to gold, to which all of the same criticisms apply but which has nonetheless maintained value for millenia?


Gold at least has legitimate industrial uses that put a floor under its valuation.


Arguably the whole human civilisation is based on imaginary things - that is on 'pretending'.


There's nothing make believe about the trillion dollar US armed forces that backs the full faith and credit of the US dollar.


This is a tired argument, comparing Bitcoin to stock and using words like "actual" in the context of stock while using words like "pretending" in the context of Bitcoin.

Most stock today doesn't pay dividents and has no direct relationship to the company's assets. You own some tradeable tokens and you bet on them going up or down in value. Implying stock ownership gives you something that's tangible and non-speculative is the real pretending.


fewer than 20% of the stocks in the S&P500 do not pay dividends:

https://www.dividend.com/investor-resources/sp-500-companies...


Centralized databases power 99.9% because Ethereum like technologies aren’t ready for general use yet. My money is on Ethereum getting there first with sharding, proof of stake, and adoption but whichever one does will unlock many, many use cases.


Which use cases?


I put my finger on it being too expensive. It works when it is subsidized by all these speculators - but eventually this cost needs to be paid.


Replication of fixed infrastructure and computing costs come to mind.


> Ethereum [...] apps [...] are fully trusted

Haha you're funny.

On a more serious note, I don't think the current generation of blockchains is "The Future". They offer basically nothing more than what you can achieve with a publicly hosted git repository with post-commit hooks that enforce signatures. Actually, Ethereum is far worse, because all computations are repeated by every node (as far as I know), which is a huge waste of energy. If you want reliable distributed computation, you need to make sure there's some way of smart distribution of work... e.g. offer exponentially diminishing returns for each "duplicated" evaluation of the same piece of code beyond the 2nd.


Even better:

> Ethereum [...] apps [...] never fail

Just...

wow.

Listen, distributed ledgers are useful.

Breathless hyped up nonsense about "flaw-proof technologies that even YOU can use if you just give me 10 bucks!!!" (in used car salesman voice) ... yeah ... that's not so useful.

These people just can't seem to see the difference.


They didn’t say such apps exist, they said Ethereum provides the protocol for such apps.


> Listen, distributed ledgers are useful.

> Breathless hyped up nonsense about "flaw-proof technologies that even YOU can use if you just give me 10 bucks!!!" (in used car salesman voice) ... yeah ... that's not so useful.

> These people just can't seem to see the difference.

To be clear, are you claiming the GGP (Sargos) can't see the difference between these two things?


The replication is for secure non-censorable trusted code execution.

For high-throughput computations, Golem is being developed, where there is (generally) no computation replication. www.golem.network. The repository is here: https://github.com/golemfactory


> Ethereum is providing a base layer protocol for apps that never go down, never fail, and are fully trusted.

Even if we were to grant that these claims are true, we still have to ask what classes of application benefit from slower, more expensive distributed systems. Blockchains solve only one problem, which is consensus formation on ontrusted networks. They do not solve politics, governance, downtime, and certainly not application failure.. these things all exist on blockchains.

Essentially none of the application ported from centralized systems to Ethereum or even Bitcoin actually face Byzantine consensus issues when deployed as centralized systems. Bitcoin can be used as a 24x7x365 global collateral and value transfer instrument - such a system would face consensus problems if implemented on top of traditional banking infrastructure. That's hugely valuable, but pretty much the only problem-solving application to date.

For things like asset ownership and transfer, any kind of voting, real estate, IPOs, etc, most people still have to deal with incredibly bad centralized systems, that would be amazing if rebuilt as centralized node.js apps that talk to a MySQL database. This stuff is low hanging fruit that's a huge pain for massive swathes of humanity. And despite the fact that no Palo Alto real estate broker is talking to the city's land deed system over unreliable networks, where enemy messengers might swoop in and assign your deed to the wrong buyer, there's this myth that we need distributed consensus for this and other problems best solved by... databases.


>>Even if we were to grant that these claims are true, we still have to ask what classes of application benefit from slower, more expensive distributed systems

Nobody denies its slow, its a waste of resources, its buggy, its hyped. its a lot of things many early systems was. Its all challenges that people try to solve. What is interresting is if those things can be solved. And i dont understand Why so many dont see a benefit if we could one day build true decentralized systems... its not the distributed or avalibility thats important. Its not like goverments or companies always have the peoples best interrest when they make decissions.


> Nobody denies its slow, its a waste of resources, its buggy, its hyped

A lot of people deny all of that, actually.

> slow

They say "there is no faster way to achieve distributed consensus".

> waste

They say "it's not wasteful because its securing the network".

> buggy

They say "unlike all other software systems, it's never been hacked!".

> hyped

They say "it's literally the greatest innovation since the internet"

> And i dont understand Why so many dont see a benefit if we could one day build true decentralized systems

I have no idea, I guess most engineers are just too jealous of early adopters getting rich to be willing to give cryptocurrency a chance. There are so many problems that can be solved right now with cryptocurrency if the community would just give cryptocurrency a fair shot instead of always trying to say that it doesn't solve any real problems.

Note: the previous paragraph is a satirical portrayal of a cryptocurrency enthusiast attempting to explain why the entire software community isn't hyped about cryptocurrency.


Perhaps Im just a dreamer... but i believe in an open-source, decentralized, free information, patentless World... Where one day nobody can rewrite history, can force a monopoly down our throath, lock us in, be unaccoubtable for their actions, censor us or run us around like sheep. One day we stop shooting ourselves in the foot and pee our pants and stop being blind to the tech giants like they have our best interrest. A true decentralized system might be nesssary one day to avoid us being enslaved in democrazy


> Perhaps Im just a dreamer... but i believe in an open-source, decentralized, free information, patentless World... Where one day nobody can rewrite history, can force a monopoly down our throath, lock us in, be unaccoubtable for their actions, censor us or run us around like sheep

> open-source

Blockchain software is an amazing example of open-source software, but blockchain is ultimately unimportant with respect to the entire open-source movement as whole.

> decentralized

Blockchains are decentralized, but they can't "decentralize the world" because they don't exist in the world so they necessarily require outsourcing any real world effects to untrustworthy humans who do not have to respect the state of the blockchain in the material world.

> free information

Not sure what this even means, but whatever market incentives exist that might keep information from "being free" will always exist, regardless of blockchains.

> patentless

The patent system is a political institution that will exist regardless of blockchains.

> nobody can rewrite history

As has been demonstrated many times, blockchain history can be trivially rewritten given the appropriate political influence of those who control the nodes. The DAO is a classic example of that.

> force a monopoly down our throath

Blockchains do absolutely nothing to stop this.

> be unaccoubtable for their actions

Blockchains do absolutely nothing to stop this.

> censor us or run us around like sheep.

A government can effortlessly censor you and doesn't really care if are able to flip some bits in an arbitrary digital ledger.

> One day we stop shooting ourselves in the foot and pee our pants and stop being blind to the tech giants like they have our best interrest

The cryptocurrency community does not have our best interest at heart.

> A true decentralized system might be nesssary one day to avoid us being enslaved in democrazy

This is the height of cryptocurrency delusion. I regret that I have to sound so dismissive but I think the monumental assertions you're putting forward are fundamentally disconnected from history and our current reality.


What you Seem to ignore is that my aspiration is to fix the flaws and come up with a Better system and you Seem to focus on the past and currency Which is just a small part of the picture. Control of nodes is just a reference to some current implementation details. DAO was also just bugs exploited. Being able to alter the current State of the Ledger doesnt make it invisible that you did it, or prevents others from not agreeing with you.

Im thinking about civilations destroyed or Winners of war rewriting history, or powerfull companies and poltiticians covering up information that was already out there... eg recently we found out its easy to delete from waybackmachine. If you cannot Imagine we Can build true decentralized tamperproof systems or could ever have a neeed for one i suggest you study human history.


> "Im thinking about civilations destroyed or Winners of war rewriting history, or powerfull companies and poltiticians covering up information that was already out there... "

None of these are engineering or technical problems. They are all extremely complex meatspace-based problems that get solved (if they are even solvable at all, or even actual problems) well outside of the realm of computer code.

Bitcoin and Satoshi's Glorious Blockchain is, was, and always will be a solution in search of a problem.


Sorry i dont believe that. Its the only place it can ever get solved if at all. Putting trust in people has so far proved to be flawed. Again had you made eg waybackmachine immutable then we hadent seen recent discussions about who Said What. Again look at eg bittorrent... how succesfull have copyright holders Been at preventing filesharing...

In regard to bitcoin it works pretty well for a lot of things and not so much for others. Just as everything. Personally it served me well.

And Having background in lottery abd payment industries i Can tell you we are already using it.. current systems are a terrible mess Which Anyone who ever had to implement against visa mastercard banks etc can tell you All about. Private blockchain ledgers like in the mentioned corporations is already in use and even more in the future.


> What you Seem to ignore is that my aspiration is to fix the flaws and come up with a Better system

Admirable goals but lots of us have aspirations. You need to demonstrate how your suggestions can actually help, and at this point, explaining it is not enough, you and your community need to stop talking about it and actually do something. No other software requires so much vocal defense.


Yes because pow is all there is and Will ever be. Research have stagnated. The time is up and if we don’t show results now we never will.


Even on decentralized networks like ethereum/bitcoin, it's possible for governments and companies to have a major impact on network direction. True economic decentralization is more likely to come from products like Stripe Atlas that give small players scaling and distribution tools that previously, only big corporations or well-resourced founding teams had access to.


Sure goverments can affect etherum and bitcoin but they cant stop it globally and Im talking about the next generations build from the learnings of bitcoin and the likes. Its not just about money but information any kind that could benefit. Stripe is cool but just one area and its centralized and itself relies on payment networks like visa and mastercard, banks and other psp networks all the way to the POS.


> HN almost seems Luddite in it's treatment of the underlying technology

HN dislikes the never ending and unsubstantiated breathless hype surrounding cryptocurrency, this is painfully obvious if you actually engage genuinely instead of pretending that everyone is an idiot because they don't fawn over what has amounted to a novel and interesting but mostly useless technology.

> No wireless. Less space than a nomad. Lame.

Using hindsight to cherry-pick historical examples of when naysayers were wrong is obviously terribly flawed logic yet it is a routinely common defense among cryptocurrency enthusiasts. It should be obvious to any engineer that this proves nothing and I personally take this reasoning as a sign that you might be arguing in bad faith.

> Ethereum is providing a base layer protocol for apps that never go down, never fail, and are fully trusted.

A base layer for apps that nobody cares about. Give one example of a useful Ethereum app. I define "useful" as a product or service that has demonstrated market success but is cheaper or somehow improved through cryptocurrency. I don't count it as useful if its a niche use-case that is impractical or has no market demand (e.g. avoiding taxes). Also, the idea that these systems never fail is laughably absurd as they have failed to the tune of multiple millions of dollars at this point (i.e. badly written code that failed to do what it claimed, resulting in funds being stolen).

> You wouldn't look at the internet in the early 90s and say it was useless because all it does is carry short messages

This absurd comparison of cryptocurrency to the early internet has been so thoroughly debunked that it barely merits a response. Please stop saying this.

> In a few years the layer 1 protocols will be good enough for something useful

Only in cryptocurrency software land is "in a few more years it might be useful" a defensible explanation of why cryptocurrency is the greatest innovation since the internet. Why can't you wait till its actually useful before broadcasting your condescendingly cliche cryptocurrency judgements regarding how HN is full of Luddites who are incapable of understanding technology? I'm sure cryptocurrency is just so complex and so new that todays engineers are just too dumb to understand it, it takes a special breed of elite hacker to fully grok the amazing potential of this new technology, Luddite software engineers be damned.


Hacker News' own "No wireless. Less space than a nomad. Lame." moment was when Dropbox was introduced:

> For a Linux user, you can already build such a system yourself quite trivially by getting an FTP account, mounting it locally with curlftpfs, and then using SVN or CVS on the mounted filesystem. From Windows or Mac, this FTP account could be accessed through built-in software.

https://news.ycombinator.com/item?id=9224


It's useful to look at why the comments were wrong though. In the Dropbox case it was because the user forgot the size of the market of people that didn't use Linux on their desktop or wish to periodically upload folders using FTP clients encompassed most of the computer-using world. With crypto it looks much more like the evangelists who've erred on the side of discounting the level of inconvenience of their solution to non-niche adopters (including bits which are integral, like transactions being irreversible, secure private keys being the only way of retrieving one's funds or contracts being code)


Same with Slack/Discord vs. IRC. I think geeks tend to underestimate the power of polish, ease of use and integration of populist new social media features(auto expand/play gifs).

The flip side is handing over control over everything to Silicon Valley which is slowly coming to roost. Wonder what'll happen if the Discord store doesn't make enough money to pay for servers and investors demand RoI?


Really it is a matter of relative costs to everything. They already have the skillset to be thoroughly unimpressed. It would be like if someone tried to sell you a magnifying glass that would read words held under it out loud. You can already see fine and read it - why on earth would you want that? Well it would be a useful tool for the illiterate and blind.

The first assessment isn't wrong but limited in its scope to people like them. The blind and illiterate might 'overvalue' it as a priority. Getting the actual value is hard to tell prior to knowing the whole state of the market with a lot of work. It might become a best selling memetic "gag item" like the horse head mask or be useless even in the target market practically.


IRC is irrelevant in today's world. No serious, innovative community is still on IRC.


Every big open source project has a dedicated IRC channel on Freenode, still alive and kicking.

Slack is not an alternative.


> Every big open source project has a dedicated IRC channel on Freenode, still alive and kicking. > Slack is not an alternative.

A lot of large open-source projects have Slack communities, often alongside IRC ones. Take Clojure for example, with its 14k-members “Clojurians” Slack project.


Do Slack give free access to open source communities like that? Otherwise the price to have search of over 10k messages would be over £70k/mo which I'm guessing they're not paying. Slack's pricing model seems horrific for communities like that.


> Do Slack give free access to open source communities like that?

Yes. It’s free for non-profit orgs.


Not at all. Clojurians Slack does not keeps history for more than a few days because the community does not pay, and it's the major PITA. Slack does not offer any special treatment to large open source communities, other than tolerating their existence.


> Not at all. (…) Slack does not offer any special treatment to large open source communities, other than tolerating their existence.

I wasn’t clear. It’s free for non-profit orgs. Open-source communities that aren’t registered organizations are by definition not non-profit orgs.


IRC is niche these days but I'd be interested to hear your methodology to reach the conclusion that "No serious, innovative community is still on IRC".


I've heard Amazon uses IRC internally?


Amazon uses Chime (https://aws.amazon.com/chime/) internally.


Some teams on Amazon still stubbornly remain with IRC.

Source: worked on one such team at Amazon in 2017.


We only remember those who ended up working. Remember color.com? Remember Theranos? There are probably hundreds of others in old HN posts we have long forgotten. Sometimes skepticism is warranted.

Instead of playing on our heartstrings to convince us that cryptocurrencies are useful, how about actually making something useful? We've been told for years that it was about to pay off, that "it's still building time". You've had billions poured in ICOs and pre-mined coins and you have nothing to show for it besides glorified pyramid schemes and currencies that are useless as currencies.

Comparing cryptocurrencies to the early internet is frankly absurd. Maybe people didn't imagine how huge is was going to become but the practical usefulness of being able to share data across the USA (and then the world) is obvious. Besides the Internet grew fast and was useful almost from day 1, even though it involved a complex and expensive hardware infrastructure. By the 90's the Internet wasn't mainstream but it was definitely very useful. Sci-fi writers had expected something like the Internet long before ARPA, it's just immediately obvious that being able to connect to the entire world in real time would be greatly valuable.

Furthermore what prevented a more mainstream adoption were mainly hardware limitations. Internet on dial-up wasn't fun at all. Remember having to wait for a full minute to have a progressive JPEG load up? I do. It was clunky but there was nothing else like it. Once technology improved and got faster and cheaper adoption exploded. What's slowing down progress in CryptoCurrency? The infrastructure is there, yet hardly anybody wants to use it. And unlike the Internet, there are plenty of alternatives for the vast majority of the services offered through a blockchain.

>I would bet that we see something truly unique come out of the blockchain space that we never before knew we needed.

That's faith, not reason.


> practical usefulness of being able to share data across the USA

Replace "data" with "money", and "USA" with "anywhere in the world"... do you see any value in that?


Funny. I have been able to send money cross-border relatively cheaply and relatively fast for quite some time. So yes, obviously I see value in that. But actually it has never been any kind of issue that would have even crossed my mind that it would need some fancy new solutions to enable me to do that. Would you be willing to share some more details on which kind of money transactions this is an actual unsolved problem? Where from/to are you trying to transfer the money and what are you buying/selling with that money?


This is the most obvious use-case. Try to send any amount of money outside of business hours from an account in one country to any account in another. You can't do it! You can't even send funds from an account in one bank, to an account in the SAME bank, if it's across a border.

I had this problem one time over a long-weekend, and the only solution I had was to use Western Union. Because I didn't warn my bank that I wanted to use my own money, they disabled my account until they were open again (3 days).

> relatively fast

Maybe 5 days is relatively fast to you, but it's not to me. 1 horsepower was relatively fast to people before cars were common also.


There's a big problem though, we already have many ways to do that. They have flaws but they are mature and generally pretty easy to use. Cryptocurrencies are not breaking new ground, they're trying to offer an alternative. That's a very different proposition. It's not enough for cryptocurrencies to work, they have to work better than "fiat". So far I'm unimpressed.


> Ethereum is providing a base layer protocol for apps that never go down, never fail, and are fully trusted.

dapps nobody uses? ICO pump and dumps? you lost the crowd there Sir.

We are not luddites, I don't think you fully comprehend what that word means.

You are assuming blockchain right now, in it's current shape and form, a ReallSlowDatabase(tm), with no real Fortune 500 or the military using it to power their major operations, the so called ledger already exists in Datomic and now AWS, the alleged decentralized PoW tx verification process is bullshit, mining pools have centralized, every fucking meetup I go to I get people like you getting in my fucking face telling me why im a fucking idiot for not buying to their pump and dump schemes that SEC is looking into, it's litearlly the ultimate hyperereality-using social media accounts to shill and attack unbelievers for not HODL, blindly calling any piece of fact or reality as FUD or FakeNews(tm)

Shut the fuck up.

Seriously. We are not luddites, HN users range from NASA engineers to lawyers, who all exercise common sense and have seen this type of pump and dump of technological hype probably far far longer than most blockchain thumpers.

God. I don't care if dang bans me for this post, I just had to get this off my chest. A fucking cult has hijacked the internet.


> dapps nobody uses? ICO pump and dumps? you lost the crowd there Sir.

That's human behavior, not technology. Fiat cash could easily (and has) replace cryptocurrency for this purpose. The argument is irrelevant either way: it doesn't prove that cryptocurrencies are bad and doesn't prove that cryptocurrencies have use.


> Ethereum is providing a base layer protocol for apps that never go down, never fail, and are fully trusted. That's something that future generations will take for granted but HN is largely ignoring right now.

The iPod was released at that point and you could hold it in your hands and see for yourself.

Can you give me some examples of real world applications of Ethereum's protocol that you think are being undercounted?

I recently looked for some using smart contracts but all I see is hype and a lot of VC/bitcoin money thrown at things that haven't been able to deliver and don't even need blockchain. I saw Dubai putting property records into a blockchain but not sure it has smart contracts. Perhaps something will come up in the future, but what does it have to do with excessive crypto-profit and hype money being put into startups that lack fundamentals? I am not saying experimentation is bad, but I felt like we were/are reaching dotcom pets.com levels of hype and mania.

If you ask me, HN mostly seems to be saying that the hype has been out of control over blockchain. I don't see people saying blockchain technology is lame or unreliable, do you? I have seen comparisons of bitcoin to tulip mania and ponzis, but that's not the same as discounting blockchain technologies.


https://medium.com/cryptolinks/maker-for-dummies-a-plain-eng...

A stablecoin run in a contract is pretty amazing and becoming more and more popular.


DAI, like other stablecoins, isn't really all that stable - right now it costs about $1.02 to buy $1 worth. And, it's frequently been over 5% away from $1: https://coinmarketcap.com/currencies/dai/#charts

Most "stable" coins are trading at over $1 right now, presumably as people try to flee sinking cryptocurrencies and have no practical and/or legal means to turn them into real money.


It doesn't have to always be exactly $1. You obviously can't control markets and what people sell things for...but DAI has mechanisms in it's protocol so that the price trends to $1. It's incredibly fascinating, it's decentralized, permissionless, loans with an economic system backing it. It's very novel tech and a huge achievement.


More succinctly than most of the replies:

They laughed at Columbus, they laughed at Fulton, they laughed at the Wright brothers. But they also laughed at Bozo the Clown. -- Carl Sagan


Offtopic, but people actually had a good reason to laugh at Columbus: he made a simple error in his calculations that lead him to believe Earth is much smaller that it really is.

Most of the nobles he asked for money were actually better educated than him, so the error was obvious to them. And since noone could know about America's existence it was reasonable to assume that Columbus will simply run out of supplies and starve to death in the middle of the ocean. Which almost happened, they've found the land at the very last moment.


I think the same arguments can be said about P2P during the file sharing era. File sharing was often used for sketchy purposes most of the time, like cryptocurrencies, and people argued the underlying technology (P2P) was the key breakthrough especially for legal applications. While there are some minor cases of using P2P these days, it really hasn't made the impact that was expected. I don't see why the same won't happen for blockchain and technology underlying cryptocurrencies.


Torrents and other P2P networks literally redefined how people consume music and movies. And people used p2p a lot for quite a time. Is there anyone that uses blockchain for anything, other than speculation? Any dapp used by more than 100 people?


Electronic communication services have a linear path of development any idiot can see: more bits per second, more information, more possibilities.

Blockchains don’t have that simple path of development. They fundamentally don’t make practical sense compared to centralized services. There’s a reason that everyone gets their power from a small number of centralized power plants instead of everyone throwing a few solar panels on their roof and trading their power on the marketplace to create a decentralized power grid. It sounds really cool but it’s just wildly illogical in the real world. That’s blockchain.


Actually solar panels and distributed grids make a lot of sense and what was holding them back was the state of the technology. Unlike the blockchain, which is fundamentally broken for 99.999% of all use cases, distributed power grids could actually work with the right engineering.


I know they sound really cool. I’m saying that it’s illogical to do so in the real world. Centralization is almost always cheaper, faster, and stronger.


They still have a place as a 'competitor of last resort' to force reasonability on centralized powers. They would essentially do to power what satellite dishes did to cable - and that was just another centralized power!

Sure satellite dishes are worse in latency and cost than running a cable but if the cable gets too unreasonable in comparison you can tell them to get bent and switch to satellite.


Didn't CryptoKitties bring the Etherium network to its knees? Not saying the issues aren't solvable, but can't we agree that nothing "never goes down," especially complex distributed systems.


Also: “Proof if Weak Hands” was successful in making a game out of spamming the network to the point of DoS.

When ETH was hundreds of dollars, the cost of running code on the blockchain (gas price) could get up to $50 during these attacks.

Imagine adding a column in a database table cost $50. Forget about it.


I created and run a cryptocurrency trading game called Cache (https://www.cachethegame.com) that uses ERC20 tokens in the “coin-op” sense. The solution when transaction fees go wild is to simply enable free play. Nobody wants to play $1+ in fees for something that costs a few cents.


It did become more expensive to use (on the order of 10x), but it didn't go down.


No thats not what happend. Nothing ever went down but if you wanted a tx to go through fast you had to pay more.


I was thinking of this story: https://www.bbc.com/news/technology-42237162 (Which, I understand, is for a general audience and might not be very accurate.)

I recall the founder of CryptoKitties saying that the transaction cost was significantly higher than the kitty cost. Isn't that a failure state for the network?


> Isn't that a failure state for the network?

it depends on what you define as a failure state. Technically, the network is still working - but business-case wise, it failed.


> I think everyone can agree that cryptocurrency got way ahead of itself but HN almost seems Luddite in it's treatment of the underlying technology

Or we were just chalking it up to "Irrational Exuberance." Instead of addressing initial concerns economists had about it, most proponents were arrogant in their belief that old school economics wouldn't apply to cryptocurrency.

And that gets me to the second point. The people arguing for cryptocurrency weren't transparent in their holdings of it. And that seems to be what created the bubble. Now people are questioning where the basement price is on bitcoin, and it seems like there's nothing but arguments like "It's the money of the future".


There are also matters that it is operating fundamentally at cross purpose with itself. It tried to be both the next thing for the gold-bugs who are angry with the very concept of inflationary currency despite the fact relative value really does go down compared with sustained production and being a medium of exchange outside the arbitrary control and rent-seeking of banking systems. Well being a medium for exchange is what gives bitcoins value. Rising in value makes it not worth it as a medium of exchange because everybody is holding onto their pogs instead of trading them making them useless.

That is the exact thing that everybody warns about for deflationary currencies so of course they were skeptical about it. Combine the gratuitous use of processing and power for speculation you can see why they would be less than sanguine about it even before money laundering got involved.


I too began to detect a hatred of US monetary policy from the most hardcore cryptocurrency supporters.

> Well being a medium for exchange is what gives bitcoins value.

I do want to separate out the concepts of "utility" vs "market value".

Probably a good example for this is a hammer. It has a great amount of utility for pounding in nails, securing lumber, etc. It's just not valued on the market though. $5 bucks maybe? You will save a bunch of time using one. However, being able to pound in nails doesn't justify a high cost in and of itself, since the market is flooded with them.

If, however, the utility of bitcoin(medium of exchange) is the only thing that is lifting bitcoin's market value (price), then its price depends upon it outperforming other cryptocurrencies and instruments of money. And the marginal cost of creating another cryptocurrency is maybe a weeks worth of time?

Because there appears to be an unlimited supply of numbers and algorithms, the market value of any cryptocurrency should approach zero over time even if it has great utility.


You seem to be argiing from the position of "previous skepticism of new technologies was proved false, so we should assume this skepticism will prove false too" That doesn't seem reasonable. Some skepticism has been proven accurate. There's enough enthusiasm for crypto blockchain to carry it forward if there's a future in it. We don't all need to back that vision when plenty of valid criticisms exist for the skeptical viewpoint as well.


> Go ahead and ignore it right now. It's still building time.

I've been hearing this argument for years, but you that doesn't take away that global broadcast doesn't scale to any kind of useful TPS rate unless you're willing to decrease the network diameter, which implies centralization.

All the wishful thinking in the world can't change the laws of mathematics and physics.


The underlying tech is potentially powerful and useful. The current popular implementations are slow, have very wonky hyperdeflationary economics (which makes them Ponzis whether intended or not), and are surrounded by a toxic ecosystem that is shockingly riddled with scams and fraud.

HN has, like many other circles, gotten sick of the breathless vaporware hype and scams.


>Ethereum is providing a base layer protocol for apps that never go down, never fail, and are fully trusted.

Are you suggesting that Ethereum apps can have 100% uptime (never go down, never fail), and are completely secure (fully trusted)?

Because if so I've got some shares of a bridge to sell you.


I don't even understand the benefit of 100.00% uptime, over 99.99% anyway? I mean, I probably spend more time in a parking garage with no internet available to me at all, than google spends being down in any given month.

I mean, I understand the idea that Google wants to increase their uptime because every lost query is lost revenue, but OP seemed to imply there's some intrinsic benefit that's more than just the incremental benefit...


Regardless of the marginal benefits of 100% uptime vs 99.99...the entire point of ETH is that once the contract is posted to the block chain, it continues to operate in perpetuity...and no centralized service provider or government can take it down. That's powerful, and in our age of creeping power consolidation by big tech cos and overreaching governments, I applaud the development of censorship-resistant tech.


Moving the goal posts.


What's the vesting schedule of these shares?


I'm not saying I agree, but I'd be interested in hearing your argument


You really need me to argue that achieving 100% uptime and trust (not 99.99%! 100% was the claim) just by virtue of building on top of Ethereum is implausible?


As long as there is one node on the network that you have a route over the internet to, the network is up. This is why bitcoin has also never gone down thus far.


I believe he was interested in hearing the details of the bridge deal.


Yes, explain yourself please.


You can trust it in the sense that the network will execute the code you run on it, for the most part, but most of the contract code out there is full of bugs and they keep forking the chain when people fuck up if they know the right people.


BridgeCoin?


Immutable webapps + blockchain backend = immortal applications.

It's great for evergreen software. Imagine a backpage that can't be shut down, for instance.


> I think everyone can agree that cryptocurrency got way ahead of itself but HN almost seems Luddite in it's treatment of the underlying technology to the point that we are going to have our own "No wireless. Less space than a nomad. Lame." moment that people will link to for years to come.

Well, as long as the underlying monetary policy of the cryptocurrencies is well tried and failed directly from the medieval times, I would personally:

1. Be quite careful who I blame being luddites. 2. Not holding my breath waiting for any kind of success as a currency.



How many decades do we need to wait for it to be useful? The iPod took markets by storm that very year. Blockchain has had a decade.


I’ve typically ignored crypto related posts, just like you said HN does. Thus I don’t know anything about ethereum other than it involves contracts and blockchains. However I somehow ended up in this thread and your comment about ethereum as an app host is interesting. So know that you made at least one person google ethereum and read about it.


> Ethereum is providing a base layer protocol for apps that [...] are fully trusted.

Wait, wait, I thought the hype peak is far behind us. Ever heard about 51% Attack?


> Even Google goes down (sometimes once or twice a month)

I have been using Google since 1999 and I've never seen it down once in more than 19 years.


YouTube including YouTube TV recently went down for hours.


Wasn't referring to their many other acquired services, only the titular domain.


Similar things were said about neural networks in the 90's, funnily enough. I also believe the underlying blockchain technology is important. It's just that many tech-savvy fraudsters are using the cryptocurrency hype for scamming the general population.


> In a few years the layer 1 protocols will be good enough for something useful and I would bet that we see something truly unique come out of the blockchain space that we never before knew we needed.

Care to make an actual wager? longbets.org


Exactly this. HN bitched about platform risk for years. All of a sudden something comes along and solves the issue (and happens to be open source) and they get all mad.


> "No wireless. Less space than a nomad. Lame."

And yet the iPod has been totally supplanted by products that came afterward.


Are you talking about Etherium, or blockchain tech? Because one is likely headed nowhere and one is here to stay.


I think it's Luddite (specifically sheep mentality) to believe their claims without skepticism when their results are worse than the things they say we need to replace. My model, which predates Bitcoin in various projects/products, is to generate signed, hashed logs that can be checked in a decentralized fashion all using high-performance databases and fast checkers. Check the results more often than computational steps to reduce unnecessary re-computation. If format and protocols are open, using common tech can allow for diverse implementations to reduce one-attack-to-rob-them-all setups. Also, where possible, do hashes of hashes like one, checkable report per day per bank to reduce overall size of chains over time.

This model can work with existing tech producing just some logs that can be hosted on CDN's, checked with hardware acceleration on commodity hardware, and even hosted on $5 VPS's if you want. That's a total cost of $5 per suspicious party running checks if minimizing costs and energy use. Current payment methods work at POS with 16-bit MCU's and such. The signed checks can themselves be sent in as just extra database transactions. The organizations should be non-profits or public-benefit companies whose charter, licensing agreements, and contracts make specific behaviors either mandatory if good or prohibited if bad. Possible sign auditing agreements with organizations that defend consumers with severe penalties for anything shady. Start with credit unions, though, combined with non-profit, payment processors with lean operations.

If you're wondering, the common pattern of my methods is to use the simplest, fastest, most-proven components, whether technical or legal, to build the improved version of current tech that solves the specific problems most people worry about. Nine times out of ten, it's just a shady, for-profit company being assholes due to their incentives. Just changing the model over to a public-benefit Paypal or Venmo with multinational implementation cross-checking each other by itself gets past most of that. Plus, using existing databases, crypto acceleration, and tamper-resistant smartcards keeps performance high with checking cost, hardware and energy, very low.

As I read cyptocurrency and blockchain stuff, it's like they never thought about any of this before going onto solve problems 99% of people with checking accounts and credit cards don't have. Volatile currencies, exchanges getting robbed, and no chargebacks allowed are good examples where most people wouldn't trade their bank and plastic. The folks working on these things should start with user requirements, look at existing solutions, enumerate problems, find simplest changes that fix those problems, deploy solutions, and iterate from there. Strangely, the exact advice YC gave to the startup founders that made it big.


>> Take a moment to imagine a few of the things you could do better if you had 100% reliable hosting that was safe and private.

Literally nothing more.. its why it doesnt work financially. The idea is cool though indeed

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