>But unless you’re trying to create a cryptocurrency, buy drugs or blackmail a company using ransomware there aren’t really any sensible use cases for a blockchain
God bless this fella.
I bought tesla stock futures in a country that wouldn't allow it via blockchain. I reduced a portion of my ecommerce store checkout fees to <1% by using a crypto payment processor > stripe's highway robbery of 3% per sale.
Ps: [should i redact the word 'stripe' on here to avoid shadowbanning?]
> I reduced a portion of my ecommerce store checkout fees to <1% by using a crypto payment processor > stripe's highway robbery of 3% per sale.
This is misleading because it moves all of the costs to other transactions: Your users have to get their money into exchanges (credit card fees occur here if using a card), buy the cryptocurrency (exchange fees), transfer it to you (transaction fees), and then you need to transfer the cryptocurrency somewhere else (more transaction fees), and exchange it back to another currency (more exchange fees).
Then you have to account for exchange rates, which fluctuate constantly. If I need to buy something for $100 from your store, I need to buy at least $101-$102 of cryptocurrency in case the exchange rate slips while I’m going through all of the above steps. That extra $1-$2 floats around in my wallet forever if you’re using some obscure cryptocurrency that I’m not going to use again any time soon. At best, I now have yet another account to maintain and track and do math on whenever I need to buy something.
It ends up being far, far more expensive than Stripe’s checkout payments. It’s just misleading because the expenses are spread out across so many different touch points.
With mtpelerin.com you can buy synthetic token like jEUR or jUSD whithout any bank fee, and then it is on a ETH sidechain (polygon MATIC) and the current fee to swap is $0.014061 ~ (https://polygon-gas-watch.vercel.app/) So no, it's far cheaper than any VISA/MASTERCARD/SWIPE/PAYPAL that took far too much with they big percent... It's time to change
This made me think of the original idea of using Gold or precious metals as a currency.
The idea is that this type of currency should hold value and buy the same amount of goods and services. A 1 ounce gold coin in 1920 would buy a nice tailored suit. Today a 1 ounce gold coin still buys a nice tailored suit.
Could this idea be extended to a crypto currency that is not used for pure speculative trading, but really as a store of value?
This is not possible. 1 ounce of gold today is €1500. You don't want a fixed supply for a stable price level.
The equation is MV=PY - monetary base times velocity equals price level times total output. You are aiming to hold the price level constant.
You can't really control the output, apart from making it lower, which you don't want. Controlling the velocity is hard. That leaves the monetary base... which is very easy to control if you admit centralized control. Or maybe someone smarter than me can figure out an algorithm to control it automatically. Either way, fixing M doesn't work. To stabilize P, you have to adjust M to counteract the change in Y÷V.
This is a misleading comment. If I have euros and I need dollars then obviously I have to exchange them. If we're talking about currency then we generally assume we can skip that part.
Additionally, ethereum fees are pretty reasonable for layer2 and getting cheaper on a regular basis. Right now on the order of $0.15 per transaction. That could get 10-100x cheaper with some tech on the roadmap.
> If we're talking about currency then we generally assume we can skip that part.
We’re talking about cryptocurrency, which comes in thousands of different flavors. 99.99% of the population doesn’t receive their paycheck in cryptocurrency, so the exchange rate is happening one way or another.
Ignoring the exchange rate and pretending everyone always happens to have the exact cryptocurrency that a store wants is misleading.
> Additionally, ethereum fees are pretty reasonable for layer2
Which would be great, but again you’re assuming that the stars have aligned and everyone is already using the exact cryptocurrency system you have in mind from end to end. In practice, they’re not, and they still need to incur exchange and transaction fees to get to that point.
The fees are incurred one way or another. You can’t honestly expect us to pretend that everyone already has everything in cryptocurrency and everyone is already using the exact wallets and systems as each other. Reality is entirely different than the hypothetically optimal scenario.
Do most people not have banks that just silently do currency conversion for you? I go overseas and use my US-based credit card all the time without any issues at all. The conversion fees are pennies per tx.
Next time you should check the conversion rate your bank applies versus the one Google shows you and you will see that while your bank seems to be charging pennies only it probably charges 2-3% of the full transaction sum on top of that via the conversion rate.
Chase Sapphire offers $0 forex fees, Visa has a live forex calculator. USD to EUR has a .41 percent fee from Visa. So 41 cents on $100. I can live with that.
not generally, rather occasionally, if you happen to be a resident in a first-world country that follows all the demands coming from the US and the bloc.
I bought a diamond last week for $25000. Turns out it was a fraud company. Within a week I got all my money back. That is what the 3% gives you. With blockchain there is no fraud protection and all transactions are irreversible.
In the crypto world steal 250 million dollars in hack attach and not a single thing anyone can do. This is an inferior model in every single definition of the word.
the good news is that I don't need to rely on third-parties to securely host and manage my wallets. It still is an option, but not a hard requirement to access global financial transactions.
I was just lazy to dig up more, it happens with every highstreet bank in every country. And it happens more often with online platforms such as PayPal, Stripe, Square and alike, especially if they discover your unfortunate (according to the ever-growing US sanctions list) geographic location at any point in your life.
In crypto you can add insurance if you want. It's an optional service. With credit cards it's baked in and you can't opt out. I want to opt out. I've never used a chargeback in my entire life and it's a source of profit for the credit card corporations. They pay out less than they charge, of course. I'd rather have a lower transaction fee and not feed Visa's bottomline. With crypto I'd want to just add a transaction insurance when doing something risky (like bridging cross chain).
> I want to opt out. I've never used a chargeback in my entire life
Why don't you just use no-fee debit cards then? Or a bank that offers no-fee credit cards? Pay it off on time and you won't have to worry about contributing to their profits.
Except the most usable crypto today which is Bitcoin, might cost 15$ to send someone 5$ today, maybe 20$ tomorrow depending on the ever flactuating gas fees. I wouldn't describe this as low transaction fees nor in any way efficient. Crypto right now is at best an inflationary tool good only for profiting off market speculation. It will never be as good as fiat or any other financial products based on fiat for the foreseeable future.
You clearly don't understand what the 3% is for. For one, I don't have any crypto, so I can't use your payment processor. My American Express card which charges a 3.5% processing fee is actually subsidized here.
How does your crypto payment processor handle chargebacks? Does help protect you from fraud? Do they protect your customers if you act fraudulently?
Before I begin I know nothing about pos or crypto so, to quote margin call, please, speak as you might to a young child, or a golden retriever
When I need to send my sister who has a bank account with the same bank that I have an account with, I can zelle her within minutes. I've done this once every month for the last year. In the beginning, it told me that it takes "a few days" to send amounts over USD 500 (my amount is USD 2,000). However, recently I have noticed that it says "a few minutes" for my request. There is no cost associated with it.
Assuming there is zero fraud protection, zero liability, zero anything for the transaction, is it possible to send and receive payments for free, at no cost, using any block chain technology? If yes, how can we get there? If not, why not?
Wait until you’ve experienced the bliss of UK FPS. It’s completely free for consumers, and so fast that if I transfer money between two banks with push notifications for tx, I often get the receive notification before the sent one.
You're conflating censorship and privacy here, in a somewhat hilarious way, because you get less privacy with cryptocurrency than you do with traditional banking.
You're also ignoring the censorship that happens through the exchanges when they blacklist wallets. Sure, you can send cryptocurrency from wallet to wallet, but if the exchanges blacklist the wallets, you can never get the money out to fiat currency.
I'm positive you're going to next say use monero or zcash, but then you're limited to using shady exchanges, and if you want to have your fiat bank accounts flagged, there's a great way to do it.
censorship is applied rarely in cases of porn and geopolitics. The majority are happy to stay in their lane; circumventing sanctions is a niche market.
> is it possible to send and receive payments for free, at no cost, using any block chain technology?
I could be wrong, I don't believe there's any current blockchain scheme in which this is possible: they all rely on some positive financial incentive structure for verifiers, which translates to some transaction cost.
It's conceivable that, in the near future, more blockchain financial providers offer to cover transaction fees (the way my debit card covers FX and ATM fees). But that's not a meaningful improvement from the status quo, and it's still worse, fee-wise, for the average consumer than direct ACH or PCN transfer.
Can you say more about the crypto payments you use? I was under the impression that crypto payments had a very high transaction cost so am curious about your setup.
But everyone still has to go through the steps of getting their money on to those alternate chains, which isn’t free. All of the transaction costs and exchange fees leading up to the checkout transaction and when the vendor later gets their money back out of the cryptocurrency are still expensive.
The only way vendors come out net ahead by using cryptocurrency is if it affords them some additional protections at the expense of the customer. For example, forcing customers to eat the transaction costs and exchange fees, eliminating the possibility of chargebacks if the product or service is bad, and so on.
Or more simply, they use cryptocurrency to dodge taxes. Or try to, anyway.
I'm only aware of Dharma wallet, but I'm sure there are others - allows direct & free(well, except MATIC for gas I suppose) deposits from your fiat accounts onto Polygon, an Ethereum L2.
Your exchange should support the alternate chains. They get economies of scale with the gas fees when bridging between chains. Of course, relying on an exchange for this contradicts the decentralization ideal.
Lightning has very little adoption, is hard to use because 1. you need to always be online to receive transactions and 2. routing is failure-prone, and costly in capital lock up - in an internet-connected hot-wallet no less - for payment channel collateral requirements.
Ethereum Rollups are much more promising L2 solutions.
> Ethereum Rollups are much more promising L2 solutions.
Your biases are blatant for all to see. But misinforming people to serve your interests is really uncalled for.
> Lightning has very little adoption, is hard to use because 1. you need to always be online to receive transactions and 2. routing is failure-prone, and costly in capital lock up - in an internet-connected hot-wallet no less - for payment channel collateral requirements.
Actually, Square via CASH App just enabled LN tx on it app to both iOS and Android users; so if you want to play the numbers game that is a significant onboarding--perhaps the largest in the entire ecosystem to date.
With that said, you don't have to run a node to take advantage of low tx fees: DL Muun wallet and you now have the ability to receive funds from both mianchain and LN without running a node.
FYI: Mempool on BTC mainnet is is clearing 1 sat/byte transactions (approx 5 cents.)
Question about LN, if I have funds in a Muun wallet, can I send to a friend with a CASH app wallet? The language makes it sound like we have to be on the same "payment channel" so I would guess the answer is no. But then how are retail checkouts meant to work, should a retailer set themselves up with a muun wallet as well, or is there a way for LN channels to interact?
I've been curious to try these things out for myself but I don't feel like I understand Muun wallet enough (as far as trusting myself not to screw it up)
> Question about LN, if I have funds in a Muun wallet, can I send to a friend with a CASH app wallet? The language makes it sound like we have to be on the same "payment channel" so I would guess the answer is no. But then how are retail checkouts meant to work, should a retailer set themselves up with a muun wallet as well, or is there a way for LN channels to interact?
Yes, I just tried it: this is what I did and it was all pretty seamless.
- I sent out a desired amount to my muun wallet using a LN invoice from my CASH wallet and it was received instantly for no fees.
- Once in my Muun wallet I sent it back to my CASH app bitcoin wallet using a Segwit address, as you cannot currently create a LN invoice within CASH.
So, it seems that while CASH supports LN it is only for withdraws and not deposits; this could possibly be added later as a feature by the CASH team, though. But as of now, only Segwit layer 1 address deposits are available to a CASH wallet.
Still, I paid ~7 cents with a 1sat/byte tx and it arrived in the next block since the mempool is clear using a segwit address.
If a retailer wants to take payments via BTC and LN they have two choices: use custodial wallets like Muun that support both Layer 1 and 2 protocols and move to a secure wallet where they hold the keys. Or invest in running their own nodes and a deploy a system that works for them.
Really interesting, thanks for these details, I haven't tried any of this since segwit and taproot, good to hear about that 7cent fee on an L1 transaction.
>>Actually, Square via CASH App just enabled LN tx on it app to both iOS and Android users
LN has less than 3.5K BTC for channel collateral, meaning relatively few people use it.
>>With that said, you don't have to run a node to take advantage of low tx fees:
I didn't say you need to run a node to use it. I said you needed an always online hot wallet. You need it because even to receive a LN transaction, your private keys need to sign a series HTLC of transactions linking the originating node with yours.
> LN has less than 3.5K BTC for channel collateral, meaning relatively few people use it.
Seeing as how the 2nd layer network is optimized for instant micro txs, that still is not accurate; the point is to be able to have low/no cost instant txs for small sums in order to not clog up the mempool on layer 1.
> I didn't say you need to run a node to use it. I said you needed an always online hot wallet. You need it because even to receive a LN transaction, your private keys need to sign a series HTLC of transactions linking the originating node with yours.
Sure, but that is like saying you need an internet connection to post on HN and decrying it as a pitfall of a system.
>>Seeing as how the 2nd layer network is optimized for instant micro txs, that still is not accurate; the point is to be able to have low/no cost instant txs for small sums in order to not clog up the mempool on layer 1.
It was also marketed as being a substitute for ordinary retail transactions, like purchasing a coffee, not solely micro-transactions.
>>Sure, but that is like saying you need an internet connection to post on HN and decrying it as a pitfall of a system.
Having to have your hot-wallet always online just to receive transactions is different than needing to connect to the internet to submit a comment on HN. You can still receive replies on HN when you're not connected to the internet. And connecting to the internet to post on HN doesn't expose your money to theft the way exposing your hot wallet to the internet does.
Ethereum transactions are moving to layer 2 which is a lot cheaper. Right now some layer 2 providers are as cheap as $0.15 and getting cheaper on a regular basis.
This is my issue with much of the crypto movement. The answer to all questions seems to be re-creating existing infrastructure (in this case, we are trying to recreate the price of USD). The promise of crypto was a world without this type of centralization and institutionalization. As it's grown in popularity, it appears to be re-creating all the existing centralization. Even wall street market-makers like Citadel are getting into the game [1].
I hope you appreciate how disingenuous this complaint is :(. If you want to not be tied to USD, crypto clearly does that. But someone complained that they didn't like having something that wasn't tied to USD. So crypto also solves that: DAI is a decentralized stable coin, using tons of economic incentive tricks to build something tied to USD. You don't have to use it, but that person clearly wanted something tied to USD.
Meanwhile, the banking infrastructure you all seem to love so much continues to not be programmable, continues to have multi-day settlement delays even between your own accounts (that it takes multiple days to pay off my credit card is insane), and continues to be actively exploitative of people with lots of regressive fees with built-in traps that regularly screw over the most vulnerable of people. But somehow that is all ignorable when people want to complain about crypto.
Can't crypto just solve a problem for someone and we can be happy for that? Does it really have to be better at everything at once? This person said they were getting cheaper transfers: they were paying 1% instead of 3%. Isn't that good? Why is it somehow broken if it is done with a stable coin? If these banks you love so much are so smart, why is this person so happy using crypto? Put elsewise: why are they wrong for using crypto?
This is like someone saying "I love sandwiches: they let me hold my food while I am on the go" and someone with a sour face responding "I guess if you like unhealthy heavy food! I love my salads". And I say "they do make vegetable sandwiches: they are healthy and holdable!" and being pushed back with "this is the problem I have with this new sandwich movement: they are attempting to recreate everything from salads". I mean, come on :/. If your salads are so good, why can't I hold them? Oh right, because sometimes I need a sandwich.
> But someone complained that they didn't like having something that wasn't tied to USD.
No, you're misrepresenting long_time_gone's point. EUR, for example, is very stable without being tied to USD, and EUR/USD will almost never fluctuate by 10% within a single day. Fiat currencies tend to be very stable even when not tied to USD.
Non-tied cryptocurrencies are extremely volatile to pretty much all fiat currencies (and to most other non-tied cryptocurrencies), while most fiat currencies are comparatively stable to most other fiat currencies, without being tied to them.
Or it could not be volatile and actually create something original?
I think the original complaint was it's volatile, to which the solution was "well use this one tied to the dollar"... well what about the ones that aren't volatile and aren't tied to the dollar?
The point was that each individual criticism of crypto (speed, instability, energy efficiency) brings a new solution which seemingly recreates an existing financial function or institution. This is the logical thing to do as it increases trust in crypto and speeds adoption. However, in the end, we have a crypto economy stabilized and supported by the exact institutions it was supposed to displace.
True, but I don't see why this is such a big complaint. With the Internet revolution, the answer to all questions regarding computers was to re-create all the existing infrastructure on the Internet. That's how we have online shopping, online video streaming, etc.
Imagine walking into Netflix and saying "you can't replace Blockbuster because you'll have to re-create all their existing infrastructure"
You bought Tesla futures, which, according to you, is not allowed in your country, using crypto and you think this shows how "good" it is? You've literally just given anecdotal evidence of crypto being used to facilitate an illegal financial transaction.
Buying Tesla futures might seem innocent but you realise that means other types of illegal finance shenanigans, like money laundering, are also facilitated by the same process. Bad actors can use it to bypass regulation just like you did.
Apologies, but this is a very weak an unsubstantiated article, despite agreeing with its premise full heartedly.
> Third, immutability has its downsides. Blocks in the blockchain are for all intents and purposes completely fixed. This means that a transaction that happened erroneously or illegally can never be changed. Or bad data can never be changed. Imagine if you move house and the gas company says: “There is literally no way to change your address in our database.”
I mean... does the author actually believe this is some unsolved problem in Blockchains?
Obviously you can create a blockchain that allows edits. Git is a crypto tree technology and it allows rebases.
But the whole point of Bitcoin is that no one should have the authority to reverse transactions or print new coins. And all of Web3/Eth/NFT crypto shares the idea that this technology is useful because it removes the need for trusting a central authority (you trust the code and the distributed network instead)
The idea is that you have the coins and NFTs in your own wallet and no one can take those away from you. So if you are going to add a layer that allows transactions to be immutable you are literally describing a bank or a credit card and there is no need for crypto.
I think this is a mischaracterization of what immutability is.
Immutability means you can’t change history not that you can’t update state. If my utility company needs my new home address and they use a blockchain for some reason (maybe part of a near-realtime electricity payment system), I can always sign a transaction to associate my blockchain address with my new home address. Perhaps the electricity equipment itself can sign my signature to ensure that I am physically located with it and have authority to change who it’s representing.
And perhaps worse, what happens if someone steals/copies your private key (say your paper backup) and signs a change of address in your name? Can you convince authorities that you didn't actually make the change?
Maybe if it is a physical address. After all, you presumably live there. But what if it's just some payment contract? As far as they care you yourself signed it, and they have the proof. If you can get them to cancel the contract, what was the point of using blockchain anyway?
My opinion is that web3 has greater promise with distributed content - IPFS, the DAT protocol and the Hyper protocols will allow individuals to publish content without the restrictions imposed by infrastructure providers.
I keep hearing this, but this is not a problem for the vast majority of people in the world. And IPFS is not a silver bullet for it anyway, because of the learning curve required to roll your own publishing stack. You can already host your own decentralized Mastodon instance without any blockchain.
Why is it that the numerous famous people that have gotten kicked off Facebook and Twitter never set up a blog or Mastodon instance on their own domain or use a platforms not controlled by American companies? It's because they know that the big platforms is where the people are, and trying to rebuild it all over again is not a waste of time and resources.
The VC vision of Web3 is what is saturating the airwaves, and that absolutely has crypto front and center. Accessing anything considered 'Web3' currently requires a crypto wallet login, unless you're viewing a clearweb mirror version.
But over long enough time it _must_ be somewhere where somebody can provide Computational power and
evergrowing storage capacity, right?
So.. not anywhere.
Or can the data be available in a highly fragmented fashion _and_ still be useful? I just can't imagine any content system that does not end up being centralized or highly inconvenient.
If someone cares about a piece of content's availability on IPFS, they can host it and anyone in the network can pull it from them without having to know a priori that they provide the content. That's what I mean by "anywhere". Anyone can provide any content they want, from anywhere, on whatever infrastructure they want, as long as there's a communication channel open with the rest of the network.
If you care about high availability of a piece of content, you will dedicate infrastructure to hosting it on IPFS, just like you would on the Internet.
IPFS doesn't use a blockchain nor crypto. Conceptually the Internet is a set of protocols that together map (data-identifier, provider) -> bytes (e.g. GET https://<provider>/<data-identifier>). Similarly IPFS is a set of protocols that map (data-identifier) -> bytes.
Immutability is the natural state of the past. In the real world, if I give someone money erroneously, the erroneous transfer is not "undone" but rather a new transfer that has the reverse effect of the original transfer is performed. Double-entry bookkeeping doesn't allow for penciling-in corrections. In git this is a revert commit.
Can I ask how this has been solved? I see a number of companies in the HR domain offering "blockchain-based" solutions. However, it seems to be that the immutable nature of blockchain is incompatible with data protection regulation's right to be forgotten.
I'm a crypto novice. My impression is that the author is correct (though the metaphor with the gas company is terrible) - there is no way to reverse a bad transaction.
These sorts of comments really drag down the quality of discussion on HN. Not only that, they bolster a lot of readers' antipathy to your position (whatever that might be).
I hope you quickly get to the point in your life when you realize the wealth of knowledge and wisdom that you can learn from boomers (and folks even older than that).
He probably already left and missed many opportunities and is trying to catch up by being at the other side of the "war" just like many old-minded banks.
Web2.0 for all of its buzzword bs did actually represent a fairly major change in the way websites are designed and used. Web3 is just an attempt by crypto bros to legitimize their scams. Just like the Metaverse it means nothing and consists entirely of hot air.
The author is critiqueing blockchain, and broadly I agree with the critique. But it's pretty shallow. It just regurgitates what we already know. Perhaps the salient observation is that Web3 is just blockchain hype with a new name; but the author doesn't actually make a case for that at all.
\o HN reader here. Blockchain jargon gets passed around without clear definitions, a lot. Reminding of fundamentals is helpful for clear communication.
Well ... most people would (usually) get access to an article without HN. It's here exclusively for HN readers. So, downvote as bad HN submission, but don't critique article for not catering to HN readers. I guess?
I would not mind a culture of people dunking on the submitter rather than the article. (Of course, it would be best if we didn't dunk at all, but that doesn't seem to be happening...)
I don't have power to downvote an article submission. But anyway, I'm disinclined to downvote anything here; it feels nasty. And I think if you're going to downvote, you should also comment.
I prefer to upvote things that I think are good, and should be uplist.
The idea that the blockchain is something that can be used as a database seems to be one of the big Web3 claims. Clearly, it's a thing in which arbitrary data can be stored; but that's not it's primary purpose, and it seems to be an astonishingly-inefficient way to store data.
If someone were to help me understand why it makes sense to use blockchain as a database (or as a webserver), maybe the scales would fall from my eyes, and I'd begin to grok "Web3". But as far as I can see, the only relationship between records in the blockchain is that each record has all earlier records as its parent. You can't establish any other relationship between two records, other than that each one contains a hash of all its parents.
Yes, a ledger has an implied schema. But it's a single table, so it's not much of a big deal, as schemas go. And everyone who wants to use the blockchain as a database is obliged to use the same implied schema. A flat text-file would be more versatile.
Heh, agreed. I'm a crypto skeptic on pretty much all fronts, so I'm not going to be the one to pry away the scales. I also feel like the move to shove all and everything onto distributed ledgers is misguided (and, as you say, massively ineffecient). I've been around long enough to see other similar storage fads come and go. Everything is relational! Everything is a document! Everything is a message in a queue! And so on.
The article reads as some sort of pub conversation rant rather than anything serious. The guy claims that Bitcoin is "playing Numberwang", for christ's sake.
Then there are some hilarious misgivings.
> Blocks in the blockchain are for all intents and purposes completely fixed. This means that a transaction that happened erroneously or illegally can never be changed. Or bad data can never be changed. Imagine if you move house and the gas company says: “There is literally no way to change your address in our database".
Er, no, you just submit a correction to the address. Exactly the same as issuing an SQL UPDATE, it's just that at the lower level the SQL transaction of the UPDATE is stored, rather than the updated final result.
> The guy claims that Bitcoin is "playing Numberwang", for christ's sake.
Numberwang is an absurd game show featured in the sketch comedy series That Mitchell and Webb Look. The basic "game" consists of the contestants repeatedly calling out numbers -- apparently at random most of the time -- until one of the numbers "is Numberwang", for which the contestant is (presumably) awarded points.
Aren't Bitcoin nodes also guessing numbers until one of them passes a meaningless test, for which the node is then rewarded? The metaphor is imperfect (like all metaphors), but I think this one is a better fit than you're giving it credit for.
People in the tech world pretty regularly use expressions like "dead trees" for print and "spinning rust" for magnetic disks, both of which were undeniably revolutionary and whose modern embodiments are marvels of engineering and logistics.
I guess we just have very different expectations about tone in the context of this particular article.
I'm talking about the 'gas company has the wrong address' issue. You just update it.
Erroneous transactions are a different question entirely that are too complicated to really explain in a comment.
I'd basically just say though that if you want a company or state actor to be able to reverse transactions, you probably aren't interested in cryptocurrencies, and that's fine. The five pound note I just gave to my mate isn't reversible either and I like it that way.
my bank automatically does this without me needing to do an update. worst case it just puts the money back into my account.
> I'd basically just say though that if you want a company or state actor to be able to reverse transactions, you probably aren't interested in cryptocurrencies, and that's fine.
reversing transactions are basic functionalities. we have enough issues as it is with fraud etc. having transactions that you cannot reverse is a complete non-starter.
i know financial systems in the US are about a decade behind those here.
for example: we have Faster Payments in the UK. completely free instant payments between bank accounts. and when i say instant, they’re millisecond instant.
if i mistype a name when sending a bank payment, it will warn me and ask for a confirmation.
if i mistype a bank account but not the name it either comes back to me or it goes to the right bank account.
I mean, he's right about the downsides, but I suspect we're going to be stuck with the web3 changes for a while yet. We're going to see a lot of companies go through the grift/backlash cycle.
And the consumption of ~ 110 TWh/year is going to produce some changes to the climate.
Many companies will take it on in earnest, thinking they "should" do it, not realizing that it provides their core business with no value add. They'll search for "web3 developers" and hire them, get them to "web3" enable their product, and be dumfounded by the way that it's exactly the same as before.
If your product is based on the value provided by blockchains then that is one thing, but Web3 simply can't be like Web2.0 because so few use cases actually benefit from it.
Even reaching for an analogy like the "gold rush" is bad discussion: the American gold rush was directly responsible for the rapid colonization of the west, which had negatives, but today is home to the most economically prosperous regions in the entire world. San Francisco wouldn't exist anything near its current form without the gold rush having happened; arguing Web3 is like the gold rush is tantamount to saying "its a bubble, it'll pop, but it won't disappear and it'll eventually become a stable, critical component of our society".
If you believe it'll pop and disappear, at least use a better analogy, like the dutch tulip bubble.
What is your response to the argument that, at its core, Web2 is just HTML, CSS, and JavaScript? That's all Web1 tech. Does Web2 deserve the same criticism you levy against Web3, for standing on the shoulders of giants? Or, is this just how progress works?
And web2 is just web1 with JavaScript. And web is just internet document viewers. And internet is just computers with cables. And computers are just high speed idiots.
That's a symptom of the poor signal-to-noise ratio in the space, not that it's a correct assertion.
The cypherpunk thing is happening now, not in the 90s like you might have hoped. It's startling to me how poorly received it is on HN from people who would ostensibly be a part of it otherwise.
The signal-to-noise ratio is a symptom of there not really being any significant signal to begin with. You keep posting vague statements about how valuable the technology is but haven't shown any examples of how it is doing anything useful that isn't a) a hype-to-money scheme, or b) easily replaceable by existing technologies, as far as I can tell.
I see what you're saying, but really the problem there is that Gates didn't even really get the internet (Microsoft was famously late to the party) and was a poor evangelist for it as a result. He wasn't good at explaining its benefits and Letterman was rightly skeptical. I'd have asked the same questions and I had used the internet in 1995!
There are a lot of people promoting Web3 who can't explain why it is any good in such a way that anyone can see the potential. That's on them, not the skeptics. If there is actually some real value to the concept, then someone out there should be able to explain it. And if that's impossible but the benefits are real, then who cares? It'll eventually make its value clear just like the internet eventually did and why care about that now? Oh right... because the scam doesn't work without the FOMO part.
I was skeptical when someone explained Ethereum to me in 2015, and a friend told me to invest in crypto in 2014 when Bitcoin dropped from $1,000 to $300. I looked at it again in 2017 and found cross-border payments an attractive proposition and started paying more attention to the space. Started working full time on blockchain projects on 2019. I’m still skeptical of a lot of projects that come out but there is something there. Programmable money is really interesting. Random things I’d like to do, such as buying a gamertag for my Xbox account that’s already taken from a stranger, suddenly have viable solutions. Atomic transactions allow pretty interesting things too - imagine payments like SQL transactions where your own custom logic has to be met for the transaction to occur. The issue is it’s still a really new, complicated, and fast evolving domain. It is really hard to convey years and years of skepticism turned understanding to someone in a comment on the internet.
I admit it is possible I'm just unable to see the value of these things, but I also have a lot of company in that with people who are way smarter than me.
> Programmable money is really interesting.
Why would I want to "program" money? What does that actually do for me?
> Random things I’d like to do, such as buying a gamertag for my Xbox account that’s already taken from a stranger, suddenly have viable solutions.
Yeah, see, I can't see much reason to want to do this other than to use it as part of a scam. I don't have a gamertag, but nearest I can figure it's just an online identity. Why would you want to buy someone else's identity? I suppose they might have some kind of vanity username that's being squatted? So what are we promoting here? Just a useful tool for black markets? Sure, that has some utility, but it is hardly what I would call exciting new world changing technology.
> Atomic transactions allow pretty interesting things too - imagine payments like SQL transactions where your own custom logic has to be met for the transaction to occur.
I'm imagining that, and I can't see what it does that I can't already do today in the real world without having to know any over-complicated technology.
> The issue is it’s still a really new, complicated, and fast evolving domain.
The complexity is part of the reason I don't have any trust in it. When people are trying to sell me something by saying "it's complicated, but trust me it's great!" I am immediately suspicious. They call it 'confidence' artistry for a reason.
And christ, whenever people talk about this stuff it is always about money. Does it have any uses not related to financial trickfuckery? Theoretically this is supposed to enable decentralized youtube and the like, but nobody talks about that. This makes the whole space very untrustworthy.
> I admit it is possible I'm just unable to see the value of these things, but I also have a lot of company in that with people who are way smarter than me.
I feel like there has to be a name for the fallacy here. If you looked at the cryptocurrency space, especially the blockchain builders, you'd likely find a lot of people who you'd be willing to accept are smarter than you working on it. Silvio Micali and Vitalik Buterin are 2 big names that come to mind (I don't hold/use algorand FWIW, but Silvio seems like one of the brightest minds in the field solely based on accomplishments).
Sure, but equally there are plenty of smarter-than-me people who think it's all a giant scam, so I'm inclined to trust my instincts. After all, just because they're smarter than me doesn't mean they aren't trying to scam me or haven't got caught up in some bullshit fantasy.
Besides, if the technology is actually valuable in some way I cannot yet perceive but that will become obvious over time, then I can just wait until it becomes ubiquitous and reap the benefits without risking anything.
Absolutely, and the tokens don't need to have multi-trillion dollar market caps for this to happen either.
The tokenization of everything is a mixed bag. On one hand it leads to perverse incentives that result in an incredibly low signal-to-noise ration. On the other hand it enables types of consensus that don't exist when there's not a penalty for misbehaviour (specifically for proof-of-stake and staking, the token makes it possible to reward network participants, while making the cost of attacking the network higher than the market cap of the network).
> Why would I want to "program" money? What does that actually do for me?
If you are outside of the financial industry, you probably don't. Maybe you can do some amateur high-frequency trading on the side. It's not "programmable money" in the sense of "please send $30 to the gas company every month".
As I see it, the main application is financial derivative products i.e. investment products. You can make any kind of "ownable thing" based upon other ownable things on the blockchain. Remember the mortgage-backed securities that caused the 2008 crash? Now anyone can create their own variety with some coding effort and a $100 fee. And if you pay another $100 fee, they will automatically become tradeable on major exchanges.
It's peak capitalism, basically. From a purely technological point of view, I think this is pretty damn cool. From an economic point of view, it's going to be our downfall.
This is what puzzles me. Taking your Xbox gamertag on the blockchain as an example. It doesn't provide any decentralization, Microsoft is the central entity that gives the gamertag it's value. There's 0 incentive for Sony or any other competitor to honor the ownership, because why would they. It's more beneficial for them to let you register an account (with a potentially duplicate name). Since your NFT is in reality tied to a central entity, I'm having a hard time understanding why you need the blockchain in the first place, at the end of the day it's MS that calls the shots. The reason why Xbox & Sony don't interop isn't a technical problem, but a political one and blockchain does nothing to address the issue.
And from the looks of it, everything crypto is centralizing extremely fast, see Binance/Coinbase for exchanges, Opensea for NFTs. So at the end of the day you're still at the whims of large entities.
Moxie Marlinspike's article at the start of the year got plenty of traction, and it was far more nuanced than most, not least because the author actually went through the process of creating and NFT and dApp, evaluating the tools from a software engineer standpoint, and from the consumer standpoint.
What in your opinion would count as an optimistic conclusion?
Optimism to me is noticing that you can contribute to fixing all the painpoints you encounter, and can optionally monetize all those fixes such that if you care about money the market is saying this is the only thing to focus on. The barrier to entry is in many ways lower than trying to do the same as a Web 2 style SaaS product, because the infrastructure demands are lower and the funnel is basically 1 step, as every interaction in this space already is a transaction.
For example, the article spends a lot of time on OpenSea and how their wallet was using the OpenSea API, to bolster their "hey that doesn't match the ideal from proponents" crux of the article. What do you think the people that built OpenSea did when they decided to build OpenSea? So build another OpenSea, or submit a pull request to the wallet to render NFTs differently, use your own node, make a better node software, make an infura competitor which is a CDN of nodes, improve the build tools.... any part of the stack is up for grabs.
Thats what permissionless is. Pretty easy to get traction for any variant you release because there is immediate utility from it from other people looking for painpoints improved upon.
There are plenty of developer blog posts from people doing those specific things, they're just not posted on HN or moving up very high often. We could post conversations in github issues, or pull requests all day here. Easily shift the discussion. It's out of character that the HN audience as an aggregate only considers a few parts to make a conclusion on this specific topic.
Dropbox is never going to be popular. Anyone can trivially build the same system with SSH, FTP and curlftpfs, not to mention all of the problems caused by the fact that it's still in its early stages. [1]
Bad analogy. Dropbox solved a problem in a simpler way than doing it yourself. What problem is web3 solving? And is it really simpler to use than the alternative?
My analogy was to point out how wrong HN can be when judging things in their current early state, not to mention the tech bias.
To answer you, Web3 is solving both the data ownership problem and the centralization problem, and currently there is no other solution that is even remotely comparable to what Web3 is achieving.
> And is it really simpler to use than the alternative?
I understand why it can be daunting for a new user, but UX is improving each and every day, and I imagine that eventually you'll be able to use it without even needing to install Metamask or using a wallet somehow. ICP is doing something similar, so that you can use dapps without approving each and every single transaction.
However, as a developer I can tell you that it's MUCH simpler to use than the legacy web. I developed a dapp that essentially uses no backend and requires me to host nothing. It is much, much better, even though the infrastructure is essentially nonexistent.
Calling it Web3 implies it is a world changing technology.
There may be something interesting about it, but I have no idea what that could be. It's possible that the cryptocurrency promoters are like the Homebrew Computer Club people of the late '70's and Visicalc hasn't been invented yet.
I’ve been saying this for months but the easiest way to get front page HN is to repeat this argument. Those who are interested in the space defend it (including me), those who aren’t interested in the space attack it, and that activity pushes it further up.
Web3 already exists it's called browser extensions plus all other software solutions that can be embedded inside browsers and websites. The thing is it all has to be standardized.
This comment belies such a fundamental misunderstanding of the modern financial system it's hard to know where to begin.
Moderate inflation is a feature not a bug. It drives investment and increases the money supply.
On the opposite side, major coins (including BTC and ETH) are massively deflationary, so much so that there's a day to celebrate the purchase of a pizza for $800 million [1]. We shouldn't even call them "currencies" because they're not. They're assets and hugely speculative ones at that.
It's really just as well it's an asset because deflationary currencies aren't good for anyone. Ostensibly your money goes up in value over time but no one spends it so the economy just grinds to a halt.
> Moderate inflation is a feature not a bug. It drives investment and increases the money supply.
Hah! Indeed. By 'drives investment' do you mean massively inflated asset prices (you may have heard the term 'Everything Bubble') and wild speculation (i.e. crypto, VCs) such as hasn't been seen since the Roaring 20s?
> We shouldn't even call them "currencies" because they're not. They're assets and hugely speculative ones at that.
Quite. I was going to point out that there's a difference between 'currency' and 'money', but I can see you're busy trying to school me. Please continue.
> It's really just as well it's an asset because deflationary currencies aren't good for anyone. Ostensibly your money goes up in value over time but no one spends it so the economy just grinds to a halt.
Well, I'll take that over the USD dollar, which has collapsed in value by almost 99% since 1913 (when the Fed was created), and is about to collapse even further. All of your bullet points are perfectly in line with government and central bank propaganda—I mean, talking points.
Overall, I would posit the complexity of our 'modern financial system' is a great way to obfuscate the truth about it—don't confuse knowledge of facts with understanding. Plenty of people smarter than you have both, and have come to the opposite conclusion[0].
You're pointing out a difference between currency and money, but then treating USD like it's an investment that's a massive loss since 1913, though the point of USD is meant to be a currency, and not a store of value. You're meant to use it at its current price, and it's intended to be worth less over time to encourage you to spend it.
Investments, valued in USD, beat inflation, so it doesn't matter that the USD is inflationary.
Amazing. Only on HN. Technically correct, yet completely disconnected from reality:
Forget the propaganda about the financial system that we've all grown up with, blame it on user error, and utterly disregard anyone who doesn't derive their income from assets and has to buy groceries (i.e. most of the user base).
> Moderate inflation is a feature not a bug. It drives investment and increases the money supply.
It fundamentally isn't as simple as inflation good, no inflation bad.
It's all fine and dandy until central banks lose control and inflation causes catastrophic issues. Not to mention that it's most definitely a bug for people that intend to save for basics like housing on smaller incomes that can't efficiently invest in assets. Inflation tends to benefit those closest to the money first, common assets second then everything else by which point a new cycle has already begun.
BTC & ETH aren't deflationary as much as they are predictable in their money supply. You could say that they elongate the time preference of investments and that isn't only a bad thing.
> It's all fine and dandy until central banks lose control and inflation causes catastrophic issues.
Genuinely curious: what issues are you specifically referring to?
> BTC & ETH aren't deflationary as much as they are predictable in their money supply.
See this is another crypto myth. So yes Bitcoin is limited to ~21M coins theoretically but we don't actually know what the limit is because wallets have gotten lost and will continue to be lost. Second, a lot of crypto people don't seem to understand the impact of derivatives to effectively increase the supply and thus bring about all the problems crypto advocates say crypto doesn't have.
I mean look at GameStop. There are a fixed number of shares on the market (buybacks and issuing new shares notwithstanding). Yet derivatives created a situation where there simply weren't enough outstanding shares to cover short interest. Taken to its extreme this would mean those shares would have infinite value.
What really undid the subprime mortgage market (other than the fraudulent ratings for which no one went to jail and they absolutely should have) was all the derivatives on top of actual mortgages. I forget the exact number but it was something like a factor of 10-20 (meaning $10-20 in derivatives for each $1 of a mortgage).
The exact same thing can (and will) happen to crypto. That's why fixed supply is a myth.
> Genuinely curious: what issues are you specifically referring to?
When central bank/governments lose control or get greedy you end up with hyperinflation. Should I go into examples of how hyperinflation has been catastrophic?
> we don't actually know what the limit is because wallets have gotten lost and will continue to be lost.
We know the limit but we don't know how much is being circulated. Central bank money is the opposite, you know roughly how much is being circulated (if you're government is nice to you) and there is no limit.
> The impact of derivatives to effectively increase the supply
Derivates don't increase the money supply itself, they play tricks using the underlying asset. If you hold the Bitcoin asset yourself, someone playing with derivatives means very little to you. Though if you have your balance on an exchange, that's on you.
On the other hand, in the current system, you have no access to the underlying asset. You don't own 0.00001% of the central bank. In other words, everything you are using _is_ a derivative. Even something as simple as keeping your money in the bank means you are using a derivative. That being the option of the bank to hold no reserves for the money you deposited.
> When central bank/governments lose control or get greedy you end up with hyperinflation.
Instead you have hyperdeflation. Wonderful.
> Derivates don't increase the money supply itself, they play tricks using the underlying asset.
That's why I said "effectively".
> If you hold the Bitcoin asset yourself, someone playing with derivatives means very little to you.
That's complete nonsense. There are countless examples where derivatives have affected the price of the underlying asset. I gave several. Derivatives drove up the price of GameStop. The subprime mortgage collapse devastated house prices even for people who didn't hold a mortgage at all.
> On the other hand, in the current system, you have no access to the underlying asset.
Let's be honest: you don't have access or any control over the underlying crypto asset either. 0.00002% is really 0%. Bitcoin is concentrated in very few hands [1]. The vast majority of BTC is held and not traded [2]. Lots of people are holding ("hodling") BTC on the expectation that the price will continue to rise.
That's... a bubble. Eventually that sentiment will turn and some large unaccountable players will simply dump it and get out.
> In other words, everything you are using _is_ a derivative.
No, it isn't. The cash itself is the asset. What gives it value is that it is backed by [insert government here].
> Even something as simple as keeping your money in the bank means you are using a derivative.
No, you're trusting your money to a custodian that is overseen by the government.
> That being the option of the bank to hold no reserves for the money you deposited.
Again, wrong. Banks are required to hold a portion of their assets and loans in hard currency. This is the fractional reserve system.
A lot of former gold bugs love crypto. They too are under a lot of misconceptions (eg the USD has never once been 100% backed by gold). Additionally, fiat currencies are a response to the problems created by trying to peg assets to other assets yet we're going to learn those same lessons with so-called "stablecoins".
How and where? At worst, it's gradual and predictable. Where is the central planning of the bitcoin supply? Hyperinflation on the other hand is as a direct result of the control of a few in the matters of an economy. Not the same.
> Let's be honest: you don't have access or any control over the underlying crypto asset either. 0.00002% is really 0%.
I don't know how to response to this 0.00002% != 0% just like $20k != $0. There is nothing wrong with saving. Whether it's speculating or not is a completely different matter. Let's not pretend no other assets are speculated on especially given the degree of novelty.
You are ranting about derivatives being bad, which I agree with. I'm giving you an option that decreases the effect and increases the options for opting out of derivatives. One of the reason derivates and bubbles are so strong is precisely because of inflation and central planned economy. Meme stocks sparked primarily as a result of short time preference and centrally planned economy.
> Again, wrong. Banks are required to hold a portion of their assets and loans in hard currency. This is the fractional reserve system.
Here's your "fractional reserve system":
> As announced on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions. [0]
> backed by [insert government here].
> custodian that is overseen by the government.
I'm sure the banks and governments are very friendly and wouldn't ever have incentives that are to the detriment of others.
Which savings accounts offer interest rates that can compete with crypto exchanges? Or wallet staking? Chase, BoA and Wells Fargo savings accounts in the US pay 0.01% APY. Ally is down to 0.5% APY.
There is a crypto exchange offering 1.01% APY on BTC, a difference of 10,000% compared to Chase (and much higher APYs on other tokens).
Not shilling, I moved everything from Ally to a money market account elsewhere, I'd genuinely like to know where you're seeing a relevant amount of interest.
So don't have it sitting in an exchange? Try to educate oneself a little on DeFi? Also there are blockchain with gas fees that cost fractions of a penny.
2% inflation is not stealing. 2% inflation is time decay. Use it or lose it. Your claims on future productivity cannot last forever, that over-encumbers the future. (I recognize we live in a system where savings are required, but I don't think it's optimal)
The word 'use' is quite ambiguous. I didn't take it to mean 'use' as in 'play around for funzies', I meant more akin to useful products that make a tangible difference in my life (or any life).
Game consoles do exactly what they claim: they provide interactive amusements. Web3 is making a lot of claims, but the example given of its utility was only that of an interactive amusement.
that's just a thread of paid picrews. What is the value-add that Web3 offers here? That your avatar comes with a digital slip of paper you can use for speculation?
In terms of ownership, so far, I haven't seen any NFT space that actually adds any value over picrews let alone comissioned artwork. There's no legal framework binding the blockchain ledger entry to the copyright of the images and even if it existed, what's the value add over traditional proof-of-purchases?
You've linked to two traditional web sites. The first one is people sharing auto-generated art of themselves (which you can generate for free through numerous apps and websites), and the second is shilling NFTs.
Web3 has already changed the world. Not by much, but the statement doesn't make promises as to how much it has to in order to qualify for "changing the world".
> it’s clear that Web3 is just a new spin on the same blockchain tech that we’ve been discussing for the last decade.
Web3 is everything blockchain. Queue the astronaut holding a gun "always has been" meme. Its adopted a new label, but the core commerce frameworks (Bitcoin, ETH) and the applications of those frameworks (NFT, DeFi, .eth, etc) are inextricable, technically and philosophically.
I mean, really, Web3 sucks, but this article is clearly written by a 60 year old who has been slowly following its developments through Bloomberg articles. The clearest signal that someone hasn't put much critical thinking at all into why Web3 is bad, is prioritizing a complaint about the environmental impact, because that is a problem, but one the community will fix. Its an argument about implementation, not philosophy.
> But unless you’re trying to create a cryptocurrency, buy drugs or blackmail a company using ransomware there aren’t really any sensible use cases for a blockchain
As bearish as I am on most Web3 technologies; the one that I feel does have use-cases are the core currencies. Look, if you believe the only use-cases for crypto are illegal, and obviously you aren't buying anything illegal with it (I'd bet this guy even drives the speed limit), then you just by-definition outed yourself as being critically misinformed. Because (1) illegal use-cases are still use-cases, and won't stop growth, and (2) there are plenty of legitimate use-cases.
Really getting tired of all those zero substance hate articles against blockchain by people who have no vision and zero clue of how long it takes for new technologies to reach maturity. This is a shitpost for all I care.
Whilst I believe the term Web3 rightfully receives a lot of criticism, this article is one of the dumbest I've yet seen.
"But unless you’re trying to create a cryptocurrency, buy drugs or blackmail a company using ransomware there aren’t really any sensible use cases for a blockchain"
This is just incorrect and plain lazy. If you take the entire space of crypto, there's no evidence that "buying drugs" or ransomware are the dominant use cases.
Further, there's a well known list of actual web3 use cases: decentralized storage, DAOs, NFTs, crypto gaming, Defi (which has tons of individual use cases), yield farming and more.
You may believe that all of these use cases are worthless and never make it into the mainstream. It's fine to think that. But they are use cases, and it's where most activity is. Failing to even mention them and wrapping it up as "buying drugs" is ridiculous.
"So most people who use the bitcoin blockchain don’t actually have their own copy. As such, it’s not widely distributed."
Here the author contradicts his own point. He argues that scaling a distributed ledger is hard, implying it can't work due to inefficiencies. The very fact that the typical user does not run their own node whilst Bitcoin is still widely distributed directly negates this point as well as the scaling point.
"But if you’re wanting to store your invoices, customer lists or financial data, having a public database is a very bad idea indeed."
Nobody, including blockchain proponents, ever made the point that you should use it for this.
"Or bad data can never be changed. Imagine if you move house and the gas company says: “There is literally no way to change your address in our database."
That's not at all how this works. To correct data in a block chain, you add to it. The history entry with the incorrect data will persist, as it should. Incorrect data is not the issue, illegal data is.
"Finally, trust is an important aspect of all transactions"
This is a very complex topic which I won't fully explore. But the counter point here is that crypto proponents aim to cut out powerful monopolist middlemen for particular use cases. The idea of trustless in this context does not mean absence of trust, it means putting trust in protocols, smart contracts, the like.
"There is an argument that the blockchain is increasingly using electricity from renewable sources, but that’s a red herring. If bitcoin is using that renewable power, then somebody else is having to use coal and gas to power their house."
This is another dumbed down generalization. This depends entirely on how and where the renewable energy is generated. In an urban area with mixed out grid, Bitcoin mining would compete with mainstream energy consumers, which is bad. If Bitcoin mining is instead done in a remote area with a surplus of renewable energy, then it typically does not compete, because said energy can't be transported anyway.
"For example, ethereum, the current go-to blockchain for Web3, uses the same amount of energy as the Netherlands."
Correct, and it's bad. But an honest author would include the pretty essential statement that ethereum merges to PoS in less than 6 months from now.
"Bitcoin produces nothing"
It produces and settles about 1T$ in value. It provides new use cases for the unbanked. It doesn't matter what your political stance on it is, clearly it's not nothing.
To be clear, you might find my counter points to be biased towards pro-crypto. They are, but the point is not to claim absolute truth, rather that the original article lacks any substance. It makes sweeping statements without any basis, it offers no counter points, no pros and cons, important information is left out, it's just pure garbage. I find it shocking that a "Dr" gets away with writing this drivel. It seems to me has absolutely no idea what he's talking about, yet presents himself as an authoritative voice.
>...it’s clear that Web3 is just a new spin on the same blockchain tech that we’ve been discussing for the last decade.
The important difference being that the EVM allows us to add logic to transactions.
>Web3 enthusiasts want to add a blockchain layer to our internet infrastructure ...Rather than online services and data being delivered from centralised servers owned by the likes of Amazon, Google, and Facebook, it will be delivered from the blockchain...
It is a new layer, and that obviously means other services are not replaced. You can't add a layer that replaces what's below it. A new layer is always built on top.
>Blockchains are generally defined as distributed, public, immutable, trustless databases.
No they're not. Blockchains are a cryptographic means of achieving distributed consensus. They can be private, mutable, and require trust.
>...there aren’t really any sensible use cases for a blockchain — and Web3 doesn’t change that.
OpenSea did $1 billion in transactions last month. Ethereum moved more value than Visa last year. People are using it.
>...who needs every user of a database to have their own copy?
This is wrong in many different ways.
>...The web is really a giant public database.
No it isn't.
>But if you’re wanting to store your invoices, customer lists or financial data, having a public database is a very bad idea indeed....
If it isn't a good use-case, then use an actual database...?
>... Imagine if you move house and the gas company says: “There is literally no way to change your address in our database.”
You can just update the data in a new block... This makes no sense.
>Finally, trust is an important aspect of all transactions. Apart from crypto assets, there is no activity that operates in a trust-free environment.... I trust the gas company to bill me correctly...
You trust, but verify. You wouldn't blindly pay your gas company no matter what the bill amount. If it shot up 100x, you wouldn't just pay it. You'd investigate what's going on.
>...most crypto enthusiasts put their trust in incredibly dodgy exchanges and blatantly fraudulent crypto assets.
Most of them do this? Really? How do you know? In my experience, most crypto enthusiasts are just holding BTC or ETH.
>And this is without getting to the damage that blockchains are causing the environment.
Not all blockchains run on energy intensive Proof of Work. Ethereum will soon run on Proof of Stake, which will reduce energy costs dramatically.
>There is an argument that the blockchain is increasingly using electricity from renewable sources, but that’s a red herring. If bitcoin is using that renewable power, then somebody else is having to use coal and gas to power their house.
This does not make logical sense. It isn't a 1:1 rate of electricity that is generated to electricity used. There is waste. Proof of Work is using waste electricity first. It is a constant load on the system. It is also seeking the cheapest electricity, so it is incentivized to operate at off-hours to use more waste, and then slow at peak times to allow that waste to go to other uses. It's like a battery that uses social/financial means to store energy rather than electrons.
I cringe so hard when I see someone with these type of opinions.
Why you just don't shut up. If it actually doesn't change the world, you were just one of the critics, if it actually does, the size of the change will be the same as the size of your foolness.
Right? All those people who spoke out about Madoff's scheme look like IDIOTS now, just one of the critics. It's the ones who were hyping him up even as federal charges were being laid that were real geniuses.
/sarcasm
"Web3" needs MORE critics, not fewer. With brand-new multi-million dollar consequence-free hacks, rug-pulls, and general pyramid schemery happening seemingly on the daily, the critics need to be _louder_ than all of the hucksters and deluded hopefuls.
> "Web3" needs MORE critics, not fewer. With brand-new multi-million dollar consequence-free hacks, rug-pulls, and general pyramid schemery happening seemingly on the daily, the critics need to be _louder_ than all of the hucksters and deluded hopefuls.
So... in your opinion something deserves to be critizised because people use it for crimes? So, FIATs should also be critized because of that? Since people have been using those to commit all sort of crimes for decades.
Your argument is kinda invalid because it says a technology should be critized because someone are using to commit crimes.
Don't take me wrong, I'm all in for you to critize it, but using those arguments it's pretty much saying everything, even the e-mail could be criticized for that.
For physical currency, there's the example of the 500 euro bank note that was eliminated because it was used mostly often in crime. Now there are call for the US $100 to be eliminated for the same reason.
The car manufacturer by that name stylizes its logo in all caps. Presumably this is just shorthand for using FIAT as an example of a dinosaur technology company that hasn't seen the light of web3.
That presents the word "Fiat" in mixed case, offering no clues why some might write it as "FIAT" when they've proven to otherwise be capable of using lowercase characters.
Web3 needs specific, reasoned criticism. "Wormhole was not secure" is clearly a valid criticism. "How did Wormhole get hacked, and how do we stop it from happening again?" is a great question.
"Ransomware and drug dealers!" is the depth of discussion we expect from TV news or Facebook.
The main concern I have about the viability of web3 is the common reactions I see to criticism of it. It sounds to me like it is an idea that is barely holding on.
As of now, web3 does not yet exist. It's just a bunch of hastily thrown together scams, pyramid schemes and outright dumb stuff like monkey jpegs, all of which is hosted on AWS.
The underlying infrastructure for the "ideal" Web3 is still being built. A lot of projects are still underway, and there's a LOT of work to do before we'll see truly groundbreaking stuff. But that, of course, takes time. What does NOT take time is creating a website, slapping metamask integration on it to sell monkey jpegs for millions via wash trading and use web3 as a marketing buzzword.
> “Unless you’re trying to create a cryptocurrency, buy drugs or blackmail a company using ransomware there aren’t really any use cases for a blockchain”
It's time for the OP and people agreeing with the article look deeper into DeFI. https://compound.finance/ & https://pooltogether.com/ are two great examples. Borrow or lend (and earn interest (on dollars if you wish so by using stablecoins like USDC or DAI) much higher than in banks), or participate in no-loss lotteries. All you need is an internet connection and you can use it without any arbitrary rules imposed by governments or companies.
If you are into technology and finance, you should be in awe with this stuff in my opinion.
This to me is another example of Crypto Andys so often just not understanding the financial system. I like this tweet [1]:
> Honestly I think we emphasize flashy defi things that give you fancy high interest rates way too much. Interest rates significantly higher than what you can get in traditional finance are inherently either temporary arbitrage opportunities or come with unstated risks attached.
Put another way: there's no such thing as a free lunch.
"Free lunch" was the same idiom that came to my mind when I read the parent comment about "no-loss lotteries," as if the electricity for hashing was clean and free.
The responsibility and risk of maintaining wallet keys seems on par to me with storing literal gold bullion. Laypeople aren't qualified. I'm not even convinced most programmers are qualified.
The house takes (Sportbook, track, casino) takes between 9-25% of every bet. So, yes, relative to those options, crypto lotteries/gambling can be set up to be practically free. That is, one can (and have) set up lotteries where there is no take (provably so) save for the cost of the transaction, which on proof of stake chains or L2s, are very very cheap.
There are many aspects of blockchain that just don't make sense, but the opportunities in providing more equitable gambling opportunities are, in a word, staggering.
Been using DeFI protocols quite successfully for over 2 years now. Have created and read many of Smart Contracts. Yes, there is no free lunch, you need to spend lots (and LOTS) of time to understand how all of this magic works. But you'll be regretting that you didn't. I can tell you that for sure.
I won't regret it, all of this is just more complicated ways of turning money into more money and is totally unnecessary. If working for a living isn't enough and I have to start spending time on DeFI or crypto to stay afloat then I would just rather die, this stuff is dystopian.
There are a number of industries where I could indeed make a huge amount of money by applying software to extract value from a system without providing anything. I'm not super interested in working in one of them.
This is such a charade. The money for the pool comes from somewhere: it's the returns you would otherwise accrue on the money you need to invest in the pool in order to play the lottery. There are definitely still losers; you're just losing your potential future interest instead of the money you have on hand today.
Things like this only serve to highlight that the principal interest of the vast majority of crypto/defi proponents is to make money for nothing (and chicks for free?) But there is no free lunch. Someone always loses, regardless of how clever we are at masking the loss.
Par for the course these days. Some of the most interesting posts on HN tend to hover around zero votes as people from both sides of the divide press their respective arrow buttons.
Who runs a decentralized Ponzi scheme (not in an abstract way)? Do you know why the scheme is named that? Hint: going on Twitter and saying "Buy DOGE!" is not a Ponzi scheme.
Ironically the author is a hedge fund founder, they are likely more acquainted with actual Ponzi schemes than a rando shilling for Compound.
(and since when are "no-loss lotteries" hallmarks of Ponzi schemes?)
Have you actually looked into it? Have you used it? Do you know how it works on the deep level? Do you know what smart contracts are? Are you able to read them?
If you answered yes to these questions, you wouldn't be saying what you're saying; I guarantee it.
Not that, you know, you're going to try and explain it or anything. "You just don't get it" has long been the go-to response for scam artists.
As any reasonable person would note: If it sounds too good to be true, it probably is. So either it isn't actually as good as it claims to be or you have to explain how it accomplishes the seemingly impossible.
I'm going to go ahead and reply to myself here with the answer:
'No-loss lottery', unsurprisingly, isn't as "free money" as it sounds. From what I can gather, you're putting the equivalent of earned interest into the lottery pool and then it all gets given away to someone in that pool. You're playing the lottery with the interest you could have earned if you were not in the lottery.
I was able to explain this without knowing much of anything about how Blockchains or Etherium work. Question is then, why didn't Parent explain it? It clearly doesn't require deep knowledge.
That didn't explain anything, it's essentially "RTFM" but with phone book sized manuals.
Look, you're the evangelist for the technology here. If you can't explain to people why they should give a damn, that's on you. As far as I can tell, you're just promoting a scam on too-good-to-be-true promises and FOMO.
you replied to a comment saying "[t]he Ponzi hallmarks are getting more obvious by the day" by... reguritating the typical reply given by Ponzi/scam artists when called out as scams?
The people on this website already know all of this stuff. "Few understand" might work on less technological adept people but it is not appropriate on a tech forum
Not quite sure why the rules of land shouldn't apply? If I read it right, doesn't it say, e.g., "Compound Treasury Accounts are securities, exclusively offered to accredited institutional customers under Rule 506(c) of Regulation D."
The other more important question is always: why is the interest so high? What risks are being taken?
I do like DeFi, but I don't like getting to hand-wavy with laws, regulation, and risk, because that is always more towards wanting to have a different society/politics etc., which is not a technical point.
For me DEXs are an even better example - having p2p exchanges where you require much less trust from other parties (nobody holds your funds, you just trade via a single function call which you can read the code of as your only interaction) and with profits going to users instead of necessarily a central party - that's just something you can't do outside of blockchains.
My biggest issue with a lot of the defi lending stuff is that it attempts to mix the on-chain concept of immutable trust, with the human and legal-level trust necessary to facilitate lending. When I borrow money from a bank, its being lent to a person, who can be tracked down, brought to court, assets repossessed, and all of this while being horrific for the person going through it, is necessary to increase the probability of loan repayment. Increasing the probability of loan repayment is directly correlative with increasing the amount of money capable of being lent out, and the frequency of loans.
In other words; the US financial system actually consists of two inextricable systems: the financial system, and the legal system. One system is on the ledger, the other isn't.
The way some lending platforms have gotten around this is to require 100% collateralization of the loan amount, with in-kind assets. There's some mildly interesting reasons why this is useful, primarily tax related, but it certainly looks quite different from how most loans work in traditional finance systems; examples, a SoFi personal loan is of-course not 100% collateralized; a mortgage is more-or-less a 100% collateralized loan but not with in-kind assets; for very high-wealth borrowers you oftentimes see loans that are structured like personal loans but 100% collateralized against physical assets the individual owns (eg house) or corporate shares; but "I'll give you $100, you give me $100, and I'll pay you back $105 in a year" just isn't common.
To be clear: I think on-chain verification of off-chain trust/identities in web3 will happen eventually. It'll piss off a lot of crypto die-hards. It'll lead to a lot of anti-crypto chads screaming about "whats the point"; and they have a valid argument. But when viewed through the lens of a value addition which enables greater access to more traditional financial vehicles and regulation, without compromising the original promise of more equitable access to financial systems, it could be a best case of both worlds.
In other words; it'd be like having access to the core American ACH system, but global, but maybe some institutions won't do business with you (or your wallet) unless that wallet has a verified real identity tied to it. You can still transact with people who don't require such a verification; which is more than you can say for the current system, and has been the source of tremendous socioeconomic hardship for massive portions of the world.
I do think that this is one of the few things that blockchains offer that is unique. It enables the financialization of everything. Suddenly I can make financial derivatives of ape jpegs or other transactions or any thing I can find on the blockchain.
A big question is whether this is good. We've seen surveillance capitalism turn much of our lives into advertising derivatives over the last two decades and many people think that this is a bad thing, enabling megacorporations to extract value from our ordinary lives. I can see the same thing happening over the next two decades with megacorporations extracting value by creating financial derivatives of my behaviors as expressed on a public blockchain. And I'm not super excited about corporations betting on how much money I will pay to watch a superhero movie or whatever.
We saw how much damage financialization of just mortgages could cause. Imagine how much damage the unregulated financialization of everything could cause.
> No doubt others will say their own favourite blockchain is more efficient and is the future of Web3. But all blockchains are much more inefficient than literally any alternative. For example, ethereum...
Please attack and critique the 'alleged' state of the art blockchains of today that don't use PoW.
Once again, only attacking the easiest examples in the blockchain industry (which use PoW). Everyone knows that Bitcoin, and Ethereum are both destroying the planet. Not all cryptocurrencies are the same as those two and many do not use PoW today.
It's very easy to criticise the environmental impacts of the first commercial petrol car and use that as an argument to say that all cars should not be used or that cars will not change the world, since petrol cars are more hostile to the environment.
The author is doing the same thing, but generalising and bundling all cryptocurrencies having the same environmental negatives as PoW cryptocurrencies (Including Bitcoin, and Ethereum).
No, PoW is not destroying the planet. Bitcoin uses less energy than pet food production. Pets are destroying the planet!
It’s not some “upgrade” to PoS. It’s a huge downgrade in security of your coin. I think a combination of PoS and PoW chains, with PoW being a base layer in public chains, with PoS chains anchoring commitments. Only when the probabilistic finality from PoW commits this, the house of cards political game that is PoS txs become final. PoS is fakery. Human failings. Everything of value in this universe takes work.
God bless this fella.
I bought tesla stock futures in a country that wouldn't allow it via blockchain. I reduced a portion of my ecommerce store checkout fees to <1% by using a crypto payment processor > stripe's highway robbery of 3% per sale.
Ps: [should i redact the word 'stripe' on here to avoid shadowbanning?]
etc.