1.) Speculative investment assets.
2.) Moving value outside of a financial system.
Unregulated stable coins have proven to be as stable as the titanic was unsinkable.
Number 1 is really a problem because of Number 2. Number 2 is a fancy way to describe a primary use case being money laundering. Of course though there are some instances where that’s helpful like backing a foreign government you agree with. Unfortunately, it also means countries like North Korea can use it to evade sanctions.
Blockchain is largely a solution in search of a problem with speculators throwing money into stuff they don’t understand.
I’m a reformed blockchain enthusiast.
When in the last five years have you had difficulty cashing out USDT, USDC, or DAI at dollar value?
> When in the last five years have you had difficulty cashing out USDT, USDC, or DAI at dollar value?
You could have said the exact same thing about Terra/UST right until sometimes last week. It works until it doesn't.
British pound has enjoyed a long history and was used as a currency for international trade until early 20st century. Then dollar took over.
One could argue it's because USA emerged from WW2 as a super-power.
But it would be foolish to say that only a major war or a fall of the empire will change what currency people use.
I'm not arguing for Terra as it was really a bad design. But it is odd that so many people just reject the idea of cryptocurrencies.
It's a big sandbox, big experiment with thousands of people working on the new primitives. Even if 80% projects are scam or failures, 20% might be revolutionary. The US dollar as it is today went through several iterations
It was kind of a stablecoin in the early days, pegged to the value of Spanish dollar which was more popular. There were also Continentals that failed and many colonial currencies that were outlawed IIRC.
I'm not saying crypto has no value, but I'm saying it's not comparable to a modern currency. You might be right that it's similar to some historical examples of weak upstart currencies most of which failed, but even those were backed by a lot more than just... what? In this case we're literally comparing to currencies that are often backed by nothing.
Well, yeah, most currencies are defacto backed by military force. That fact creates bad incentives.
Crypto doesn't have this luxury, it can be only be backed by the trust in code. If the currency is trusted - because it's open-source, open for all to use, is well designed - it's value is going to go up. See Bitcoin and Ethereum as best examples of this.
This make a decision whether to use a particular coin similar to choosing Python vs JVM and their ecosystems.
To be fair, I don't think stablecoins work well in that context. The information on how they are backed is not completely public, the companies issuing stablecoins are not that well audited...They are blobs of closed-source "stuff" that look like 1$
The theory is that the market can efficiently decide whether the code actually does work. But the practice is that you can make billions tricking people about what the code does. And often it's people who have never even glanced at the code telling you what it does. I would wager good money that there was no one invested in UST that understood the code.
Your argument reminds me of the Politician's fallacy, which goes like: "we should invest in an alternative asset in case the US dollar fails, cryptocurrency is something, thus we should invest in cryptocurrencies." Go read this thread to understand the numerous criticisms of cryptocurrencies and then think why any of the existing cryptocurrencies should be worth beyond $0 (or slightly more, I admit they are novel and thus could be a collectible).
The British Pound is still worth about the same proportionately to the dollar as it always was, and no-one would look at you funny for paying for stuff in pounds.
This turkey found that, on his first morning at the turkey farm, he was fed at 9 a.m. However, being a good inductivist, he did not jump to conclusions. He waited until he had collected a large number of observations of the fact that he was fed at 9 a.m., and he made these observations under a wide variety of circumstances, on Wednesdays and Thursdays, on warm days and cold days, on rainy days and dry days. Each day, he added another observation statement to his list. Finally, his inductivist conscience was satisfied and he carried out an inductive inference to conclude, “I am always fed at 9 a.m.”. Alas, this conclusion was shown to be false in no uncertain manner when, on Christmas eve, instead of being fed, he had his throat cut. An inductive inference with true premises has led to a false conclusion. (via Alan Chalmers, What is this thing called Science, 2nd edition, University of Queensland Press, St. Lucia, 1982)
And was it a fully general argument against induction, or do you disagree with the conclusion you were promoting?
The problem is that you don't care if a stablecoin collapses tomorrow; you care if it collapses in the next 50 years and "the stablecoin hasn't collapsed in 50 years so it won't collapse in the next 50 years" obviously doesn't apply.
Fully backed stablecoins (all other popular stablecoins with the arguable exception of Tether) are not perpetual motion machines.
Tether is large because it got a head start on network effect before the proper regulatory frameworks were put into place, in the USA at least. There's a massive amount of momentum there even though their product is inferior.
GUSD backing, also audited by a large US accounting firm, subject to New York State Department of Financial Services regulations:
USDP backing, also audited by a large US accounting firm and subject to New York State Department of Financial Services regulations:
DAI backing, viewable transparently on-chain. Currently backed 168% by collateral:
LUSD backing, viewable transparently on-chain. Currently backed 189% by collateral:
UST (Terra/Luna) and USDT (Tether) have/had nothing like this.
TerraUSD (UST) was hyped up and became popular mainly because the network paid 20% APY interest on UST deposits, which is a way higher rate on a "stablecoin" than you can get anywhere else (rates in much safer protocols are about 5-8% right now). Obviously a 20% interest rate is unsustainable when it's supported by money printed from thin air. But people were either unaware of this (unsophisticated investors), chose to overlook it (calculated risk-takers, RIP), or positioned themselves to be able to find a chair right before the music stopped (institutional investors like Celsius).
2. "Algostable" coins are experimental, and this one was propped up by ponzinomics on Anchor. It is not comparable to collateralized stablecoins, and claiming otherwise is intellectually dishonest.
2. Collateralized stablecoins are stable insofar as they actually have enough liquid collateral to redeem. None of these coins have even remotely been tested yet.
Yes, I do think the holders have been scrambling to exist - one guy lost $4M trying to swap for USDT - but I think it's not Tether cashing it out, but instead exchanges eating the losses.
That can only get you so far. The failure mode is a step function.
Wow, naming USDT was a bold choice since Paolo's answer as to why they can't tell you what backs it was almost verbatim what Skilling said when asked why Enron couldn't provide a balance sheet. 
As opposed to selling it to another chump on am exchange?
Have you ever taken your Tether holdings and redeemed them at Tether.io for US Dollars?
When until 2008 did anyone have problems with their holdings in Bear Stearns and Lehman Brothers stocks?
Things are OK right up until they aren't any more. Afterwards this can seem (painfully) obvious. Beforehand, less so.
it is in fact so bad for anonymity that i suspect you have not read much about it!
i don't disagree that it features a lot of hype bubbles and ridiculous speculation, but that's hardly specific to cryptocurrency. how's your local housing market been looking lately?
Cryptocoins only prove them selfs superior if the transaction is located to far away to conveniently travel, or involves such large sums that gathering or carrying as cash becomes inconvenient (or impossible). I would think that over 99.99% of people never engage in such transactions where they additionally require—or even prefer—anonymity.
my business is not even close to legally questionable but i prefer not to dox myself on this account. i found a friendly CC processor that i'm waiting on approval from, so it will be hybrid eventually.
online retail - drug & illegal sales - essentially money laundering
trustless decentralized computational systems - There is still trust, it's just in the code. Which also tells you how "decentralized" they are.
And conventional systems are old and grown and have a ton of security features and is still getting finetuned.
Control may be distributed, though it certainly is there. And crypto requires no party have too much control over the hash rate or else the advantage over traditional finance is lost.
> ...but it eliminates the need for middlemen...
Not technically. Even crypto-to-crypto trades still involve miners at least. And if it's L2 then you're trusting that middleman. Then for the family to get useful fiat from crypto they need an exchange.
what is your threat model here? what practical attack do you think is going to happen?
>Not technically. Even crypto-to-crypto trades still involve miners at least.
miners are not middlemen, they have zero control or ability to interfere with the transfer of funds. wiring money involves handing control of the funds to a middleman like a bank, who you have to trust to do what you ask. there are incentive structures but it is ultimately a human system. this is not the case with eg bitcoin -- any individual miner or validator who didn't want to process your transaction would simply be replaced by one of the thousands of others. if you're savvy you can simply run your own node.
You make it out as the miners would not own the Blockchain which is just wrong.
And it's not that you can run a node, you actually should run a node.
After all decentralization doesn't work if only big players own it.
But now you need to be tech savvy as you said it yourself.
And every Blockchain has this problem and the fact that there are many Blockchains makes this eve worse.
In the long run, I hope Bitcoin's existence will also lead to better monetary policies since governments have always assumed a monopoly on money, and now there's finally some true competition. And competition leads to better outcomes for consumers/citizens.
Ain't nobody want to spend time converting from the 500 down into one so they can buy an expensive widget that only accepts a specific currency
That's not entirely true. I think a more principal use case for Number 2 is purchasing things (dark web drugs, gambling, etc) outside of the usual centralized financial system rails which would stop them at the edges.
Bitcoin seems like a poor choice for money laundering because of how traceable it is; you'd need to use privacy coins for that, and even then, it's questionable (51% attack is doable in the same way that many Tor nodes are compromised).
You're correct. In most cases it's dramatically easier to confiscate the crypto. See: the horde of people who've had their cryptocurrency and NFTs stolen. To say nothing of the uncountable Bitcoin billionaires who've had a hard drive crash, lost their keys, forgotten a password, etc.
losing crypto due to hardware failure or forgetting keys is not the same as someone taking it by breaking the cryptography . If this were possible, there is tons of crypto right now for the taking. It's a self-funding bug bounty.
Relevant xkcd : why worry about breaking advanced cryptography when you can just socially engineer the passphrase out of people?
At this point I’d like to sees US regulation around $ stablecoins so we can use something else and reduce the power of the US dollar in the world. Go ahead America, regulate yourselves.
do you have references to non-crypto based coins? also recent ones?
Mr Zilla did a video about it: https://www.youtube.com/watch?v=7jmBE4yPrOs
'AI Guru makes $238,800 with misleading paid course. doesn't credit developers. | Siraj Raval FGF'
Then Zilla started exclusively focusing on crypto/NFT scams. The first few were interesting. Now... its a quite tedious, "the blockchain never lies...look they pulled the rug..." yawn
I hope he goes back to covering other interesting topics again.
After all, being a youtuber is all about monetizing your hobbies.
However because of many scammy projects the whole crypto ecosystem now has a bad name.
I'd love to see more and more scams being exposed for healthy adoption with less manipulation and real investment to projects that have the potential to change things instead of 400000% APYs.
Something which really need crypto/Blockchain and is really trustworthy?
Something which doesn't break the trust Anker of a Blockchain by having any dependency outside of a Blockchain.
Only the critics look for this type of weird ideological purity. the rest of us just want somewhere to use the value we create.
So you try to use this tech for tech sake?
Independent if there is already an existing solution?
A project is trying to add Blockchain technology into a project I'm working with. Just that the Blockchain is owned by some company and that company was publicly asking people I don't know if they are able and motivated to operate a node for them.
This for example sounds way more complex than just creating a company which has the purpose of being the trust Anker, implemented with technology like CA, contracts etc.
Yeah it's called the entire existing global financial network. You're creating things that have no value. Sorry, it's tough to hear, but you've been building baloney. Just building isn't good enough.
It brought a whole new potential of "programmable money" and being able to tokenize everything with users in control and no censoring (at least generally in theory).
We should be building dApps that incentivize sharing/hosting things (e.g. Databases (Bluzelle), files (Sia/Filecoin/IPFS), hosting (again IPFS and perhaps some Tor-like layer that can "talk" to blockchain with any kind of servers), providing data (prediction markets/Augur) which can all coordinate with chains and tokenize any good behavior and sharing resources with incentives at a global level.
Crypto should not be for "web2 and below", it should be for "web3 and above" (sorry for the buzzword, but it really defines the culture that I'm talking about). It should perhaps be a whole new layer on top of TCP/IP, and can coordinate with the regular web at interface points, otherwise being a whole new thing by itself.
But we will need some sort of transition and Metamask on "regular" sites is doing well (but not enough yet) for now.
Most of the examples above have perhaps more efficient applications already, but they are all controlled by other entities. I believe blockchain is more about philosophy of every "thing" being addressable and "actable" using a private key that can sign anything publicly with no authority (which is the most important point), and blockchain is the main application of it, yet.
I'm a big fan of it and joined plenty of signing parties but I will tell you a secret: no one else cares.
No one cares about 2fa, backups, decentralization for decentralization sake, security...
Even the crazy Snowden findings.
I'm seeing it now. All one needs is a heavily corrupted government.
There are so many interesting questions that remain undiscussed - such as, to what extent does petrodollar recycling matter any more in terms of the value of the $USD relative to the euro and other currencies, such as Chinese and Japanese? If investing in crypto is a scam, why isn't investing in these other currencies also a scam? It would be nice to see some real in-depth compare and contrast writeups accessible to people who aren't professional currency traders etc.
I know very few people who recommend investing in currencies to begin with. You invest in either hard assets (intrinsic value that currencies get pegged against), productive assets (companies value that can increase as they become more productive) or government bonds (interest rate means you get more fiat currency back than you put in.) The advice for how much fiat currency to hold at any given time is to have an emergency fund and then put all other assets into something that can at the very least keep pace with inflation. The purpose of currency is to be a medium of exchange, not an appreciating asset.
You are speaking of collectibles, not wealth/currency.
Point is, the devastating attacks people think they're lobbing at bitcoin when they say that it's not 'backed' by anything are neither devastating, nor unique to bitcoin: unless you're talking about a commodity that people are consuming directly, nothing is backed by anything other than socially held belief.
That's all money is, when you unwind it all the way. The important question is what is the relevant society, and what beliefs do they hold?
I'm talking about normal ass society. These may fluctuate, but there is a reason that since the beginning of human civilization we have currencies.
Crypro is too volatile as a way to store wealth, that's why to this day the rich are hoarding gems and gold and property.
I think all of it is ridiculous personally, even the dollar is no longer backed by gold.
Point being you cant compare volatile, scammy, etc crypto to pretty much any normal value store.
Find something that can do government's job better than the government itself and its mechanism of value exchange will dominate the world. In the meantime, do not invest in scams.
And "investing" in a currency is a scam. It's like investing in an company with not only no profit, but also no sales.
It's terrifying what Modern Money is and how it works. It scares and enrages me. It enrages me how the 'Store of Value', the things we exchange for our precious finite labor, is now whatever legal fan fiction that an influential someone at wall street or an equivalent finds a funny idea and convinces enough of his or her ilk to accept.
You don't get that with many other stores of value
Isn't the answer to this that other currencies are backed by the might (both economic and military) of nations? I don't think mainstream blockchains like bitcoin and ethereum are scams, but this is an important distinction between sovereign currencies and cryptocurrencies.
There was a video and thread on 'How (inter)national money transfers works' a couple of months ago
ALL crypto is 100% scams. There is no 99%.
In fact 100% of the time, they have no use case at all and they are even worse than the current system.
Crypto has totally failed time and time again to prove itself.
We now need to come to terms with this failed experiment and call it all off and make them all illegal, where it rightfully should reside in.
I lament to think of the time wasted of many engineers building this distributed casino and ruining people's lives, these engineers in this 'web3' space should instead direct their time towards solutions to make the world a better place.
Who is “we”? Ironically, crypto was invented to protect individuals against the authoritarian tendencies of people such as yourself. Your comment is making the case for decentralization.
What are you talking about? David Chaum? NSA? Mesopotamian cryptography?
Blockchains are designed the way they are to prevent governance and oversight, meaning, if someone scams you or steals from you, there's no way to get your money back. "No backsies" is the most fundamental principle of their design.
Your transaction might disappear from the history if the view changes to have some other branch be the accepted one
Have you read the article?
I'd say that is wild mix with hard-to-measure ratios of...
* scammers and crooks - who are attracted to crypto like flies on s***.
* the naive marks of scammers - who the scammers (and everyone else) are extracting from
* true believers - who find value in the concepts. They're willing to overlook the s*-show and actually believe in a libertarian pipe-dream of a better future with crypto as money.
* amoral speculators - who could not care less wtf crypto means but just want to dip-and-pull. They're "in it" ONLY insofar as they can convert the funny-money into real-money.
The smart scammers are not doing NFT tomfoolery, they are doing fake Saylor and Musk giveaways instead and earning far more money much more consistently. While YouTube does nothing. Cofeezilla is not going to stop people from continuing to fall for these much more persistent scams. Its going to have to come from youtube.
I distinctly remember getting junk spam physical mail as a kid, saying if you send back $60 dollars they will share the method to work from home / easy money scheme. It feeds on desperation and stress to hinder rational decision making skills.
We also have things like the lottery where people buy in to the idea theres a infintismely small chance to actually win but the emotional side of the brain takes over and ignores it.
It covers Worldcom all the way up to the recent Terra
So, I have come to the conclusion that they (Coffee, Spencer, etc) are as much part of that whole ecosystem as the scammers themselves.
They don't do this to protect anyone - if they wanted to they can simply go with their evidence to the authorities. They depend on these scammers to make videos from which they can make money. And that is all it is about to them in the end - about making money. If the scammers went away tomorrow they'd be out of a career as well.
Cryptocurrencies make various trade-offs around efficiency, energy use, user experience, etc to operate in such a hostile environment, therefore they should really be used as a last resort if there's nothing else that can achieve your objective.
For most people living in the developed world and for whom government interference isn't a problem, there is no need to use cryptocurrencies.
Anything else that's crypto/blockchain based but not a cryptocurrency for the purpose of transferring value is a scam - whether to scam the users (pump & dump, rug pull, etc) or to scam clueless investors who are happy to dump money into anything that uses a blockchain even though a database would be a better solution.
And even then, its usefulness in this regard is limited when its valuation is highly volatile. Probably not an issue when the full transaction life cycle can be fully completed (buyer acquires crypto, buyer and seller trade crypto, seller offloads the crypto) in a matter of hours. But this narrows the use case even further.
And then you have private ledgers like Monero.
Is 99% of crypto scam? Yes
Are there hundreds of legit use cases? Yes.
All worldwide. No need for a blockchain. Ever.
Is it a token on top of another blockchain? Yes -> scam. No ->
Is it anything other than pure PoW? Yes -> scam. No ->
Does it have a ICO/premine/instamine? Yes -> scam. No ->
Do miners get less than 100% of block subsidy? Yes -> scam. No ->
Is the source code mostly cloned from another project? Yes -> scam. No ->
Is majority of supply emitted in first few years? Yes -> scammy. No ->
Do creators have any expected financial gain? Yes -> scammy. No -> Maybe not a scam.
Ever since many Bitcoin clones and source derived projects with no other changes other a renaming, re-branding, block-size and tweaks and also now especially with Ethereum-based tokens that have proliferated, so did the scams.
Nano seems to qualify as 'not a scam'.
Ads? Evil, useless, fuck those people making 10x me. Recommender systems? Evil, creepy, fuck those people making all that money.
You can short this shit. You can short Google stock. You can short Bitcoin.
So if it’s all one big phony ads tracking machine learning Ponzi scheme scam? Don’t bitch and moan to the choir, profit from it!
Repeating the same arguments ad nauseum on here takes calories you could be using grind leetcode and get that leet job. ducks
Shorting things you disagree with morally is also a terrible idea, unless you also think they are bad business. I disagree with a lot of “money printing” tech on moral grounds, if I shorted those I’d be bankrupt.
My broader point is that HN is pretty selective on which “useless” or “evil” things it will utterly lose its shit over and it seems to be, roughly, things where other hackers make a pile except YC portfolio companies.
I'm not going to throw away whatever little dignity I have left in order to try and profit off of anything relating to cryptocurrency.
Inflation is the cruelest way to invalidate the fruit of the labor of a man’s life.
But if anyone took the time to read about the history of tech startups and the culture around them over the last 50-ish years, or ECNs over the last 25-ish years: it would become immediately apparent that there is nothing new here!
Most of “crypto” circa 2022 will wash out. Most of it is tulip-mania bullshit. And in fact, the well-traveled chestnuts (e.g. “when your shoe-shine boy starts asking for stock tips, hold, when he starts giving them: sell”) date from the last time the robber/renter class kicked out this many rungs on the prosperity ladder and tried to paper it over with expensive bonds. As a society: been there, done that.
But there is true innovation hiding in little corners: Parity has figured out how to roll an update to every nginx box in the world as the price of serving a web page via WASM! That would be huge news in any other context. And I wouldn’t count the IO-HK people out just yet on beating dumbass Algorand PBFT.
But just so the ground rules are clear: you want some inflation. Just ask the guy who bought a pizza for 1BTC in like 2013 or whatever. We used to kill each other and try to enslave continents over a limited supply of gold. The Spanish were especially good at this. Look at them now.
If your roll is maintaining or increasing in value you have no incentive to back some profitable venture with it.
Inflation out of control is a problem. Deflation is knights with swords fighting over mud.
God I wish people read books.
Empathy for other humans guides us to not take advantage of others for our own benefit. People's lives are getting ruined by this stuff, and even if they are shortsighted or gullible, they are still people who we should care about.
And before cryptocurrency was big, it was shady credit card gateways in non-friendly jurisdictions. You cannot blame cryptocurrency any more than you can blame onion routing, encryption or the internet. It’s all just tech that is evolving and getting more efficient.
Taking payments over the internet has been fairly easy for decades. If not, do you really think we would be where we are today.
I get you like to blame cryptocurrency on crime, but it is but a component, of which other components are just as critical and yet we cannot have a modern digital society without them.