Technology
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I honestly don't think they solve any problems, at all. I have not seen any proof they actually do.
They're a great way to make a quick buck if you get in early enough, just like any pyramid/ponzi.
Though it does seem it's not early enough anymore. 🤷♀️
None at all?!
There are multiple important benefits. They may not all be important for you right now, but saying it doesn't solve any problems at all is just ridiculous.
The people who say it's a ponzi scheme are people who don't know what ponzi schemes are.
Except it is constantly manipulated by, for example, Elon Musk on Twitter and celebrities who then procede to rug pull. And it's not even really decentralized, because when needed, the blockchain can be changed (like what happened with Ethereum years ago, that got split into two blockchains) or blocked (like what is happening now with Luna). But you also get all the cons of decentralization: you got robbed by an hacker? Well, fuck you, no one can do nothing about it. Someone sent a malicious NFT to your wallet without your consent? Too bad you clicked on it, now your wallet's empty.
"Can be send instantly anywhere in the world, without going through expensive money-transfer agents ": except transitions on a blockchain are incredibly costly.
It happened to bitcoin too.
In this sense cryptocurrency is just like cash. It can be a blessing or a curse depending on your situation.
It's possible to build a banking system, with chargebacks and insurance and all the rest, on top of any currency. It doesn't exist AFAIK for bitcoin yet. But there's nothing stopping governments or businesses from introducing it.
You could also argue that bitcoin doesn't need any of that because it's inherently more secure than the banking system. But that's maybe another day's argument.
Yes there are risks with everything, and if its too risky for you thats okay. Others will keep using it. Btw blockchain transactions are only expensive with bitcoin and ethereum, most others are extremely cheap.
Can they then please not make a big thing out of losing everything because of gambling in a cryptocassino? And maybe please do not ask the Fed to step in?
Can they please stop appropriating artists' works, or activists' faces?
That's what really gets me going. I don't care what cryptobros do with their money and if they want to put it in a machine that spits out random amounts on the other end, be my guest. But can they please stop insisting on affecting everyone else in the world?
I did not ask this so-called Fed anything. And of course some people will lose money, thats what happens in a market. If you want zero risk, play some video game instead.
Yes it is very easy to copy or pirate digital art, big surprise. And some people combined that with cryptocurrency. Do you think no crime has ever been committed using us dollars?
It is obvious that you care a lot about "what cryptobros do with their money". The only question is, why?
The crux for all of those points is that the value is affected by fiat investments. It may not be able to be manipulated by a central bank, but it is influenced by the amount of investment put into it, which gives it the dangerous edge of being a very convenient ponzi-scheme, not to mention an incredibly unstable form of currency that most of the proletariat can't afford to risk using for their day to day expenses. That alone turns it from "currency" to "high risk investment."
Being able to send it instantly without fees is a great dream, but the above points kind of spoil the intent.
We don't need to get into the environmental aspects, or the sinful impact it's had on the price of GPU's (further pushing the proletariat from being able to fully participate in the blockchain), and the equally terrible chip shortage combined with the continued purchase and use of GPUs by crypto miners.
But blockchain cryptocurrencies have several serious problems beyond any technical oversights with the actual implentation.
arguably, your biggest stake holders now are the incredibly wealthy -> those who can afford to mine (therefore, those who can actually participate in the blockchain), and/or those who have invested the most fiat into the currency. I know what the original goals of crypto were, but the unfortunate reality is that as soon as fiat got into the mix, the dream died. Capitalism strikes again, and no one with real money being made is going to change the way it works now.
If there's a crypto out there that isn't available for fiat investment, that's the best hope to actually having a decentralized currency for all people
All currencies have this problem. Bigger ones suffer less from it, so you might not notice it. In fact it's even worse than you say.
Thanks. That's a tired auld one.
I've thought about this a bit. Right now, I don't think the currency itself can or should solve this. The only working solution is redistributing wealth through the tax system. It works very well when done properly. So profits from bitcoin should be taxed like any currency trade. Income in bitcoin should be normally. Inheritance tax, and all the rest, should all be agnostic to which currency you use. This is the only proven way.
That's a very good idea. How would it work? Have you seen been anything written about this already?
For ponzi-schemes, you have to look at the crypto industry's lesser known feature: Tokens
Long before NFT's, companies have been manufacturing systems to create "tokens" (usually utility tokens) and trying to sell them to other people. This usually happens through crypto conferences, crypto meetups etc. Typically, the plan is to convince people of their impending value growth by going on a long complicated sounded explanation of how tokens are earned and how many people are buying into them, and then get that person to by a bunch of cheap tokens. The promise is that they can then sell them to others to make more money, or (in quite a few cases), sell tokens to someone who will sell tokens and give the initial seller a small percent... and so on.
Bitcoin did not start with fiat-investment opportunities, but with the way the entire crypto market is operating, that's the goal now: creating investment opportunities. It's proven to be a very effective means of making fast-money, so there's no incentive for the market to move away from pushing crypto as an investment hole rather than focusing on value control and stability to make it a more accessible form of currency. It also makes me wonder about how functional a lot of these coins even are in terms of utility. How many stores will accept every single kind of crypto?
And nobody wants to talk environment... but it's a really huge point to bring up, especially now that the environment is worse than ever. I've really dug into the impacts on other posts, but I try to at least mention it because this is the one big aspect outside of the "currency" itself that actually impacts people who choose not to participate. The GPU shortages, the giant mining farms, growth-driven-proof-of-concept-difficulty-increases, etc. I get it, they're working on something better than proof of work in terms of energy consumption. But look at how many of the damn things exist! And since all crypto currencies work alongside fiat, it's not like we're replacing traditional banking.
Sure, the energy consumption and carbon dioxide output is roughly ~50% of traditional banks, but unless everyone suddenly decides that they don't care about their fiat investments, that output is just going to grow alongside traditional banks
It's not a Ponzi exactly, it's called a pump-and-dump. But yes it's very common and very bad.
I agree that crypto currencies seem to be used much more for cynical investment profiteering, and much less for commerce, that fiat currencies. Probably because they are new. Investors are much faster at exploiting any new thing.
Bitcoin has not failed yet. It might become like company shares, an ostensibly useful thing that in practice is just a money-making game for professional gamblers. Or it might find a real large-scale use in the economy. It depends on so many factors.
The environmental issue really deserves its own discussion. There are several valid ways of looking at it. For example:
Bitcoin's model was simple and robust and successful. But bitcoin's value increased too much, too fast, making mining very profitable. It's a victim of its own success.
It's easily fixed, for example by borrowing Monero's proof-of-work algorithm. But the bitcoin devs need to be given an incentive to change it.
This is capitalism - everything gets exploited for profit until it is devastated. It's not a bitcoin issue it's sick-society issue.
I personally believe that the GPU and electricity crises are being driven by datacentres (collecting human behaviour data) and AI (finding ways to exploit that data for profit and power) but bitcoin is being used as a scapegoat.
And anyway the solution is not just "ban the bad things". There are effective ways to disincentivise people from exploiting electricity.
I thought this forum is about technology, and not religion.
Of course, no one is going to change the way an existing currency works, that would cause major trouble. If you want a different type of cryptocurrency, it should start as a new project.
Cryptocurrencies etc are religion at this stage, debating cryptobros is eerily similar to debating religious fanatics. You get a recital of the "truths of faith", and any scratching off the surface and pointing out how they are demonstrably untrue gets people angry and start calling you names.
Plenty of threads here over the last few weeks that prove it.
you have to be delusional to not objectively assess the state of gpu prices and the environmental impacts as "bad"
https://priceonomics.com/how-has-cryptocurrency-mining-influenced-gpu-prices/ here's an interesting bit on the prices
environmental impacts are largely: Carbon dioxide output, resources required to accommodate expanding blockchain, increase in proof-of-work requiring even greater resources and even higher carbon output, greater strain on gpu demands etc. then take those reasons and consider ever single crypto with these issues
all in all, you could say that those things are all bad
I think the label "bad" is very clearly subjective. For example, gpu manufacturers clearly benefit from this.
you speak to your audience. I'm assuming that a majority of people here do not represent the interests of GPU manufacturers... or we can assume everything is subjective and therefore does not matter one bit in the grand scheme of things
I have no desire to start any new crypto currency. I've worked development in that business for long enough to have completely lost the taste for it. Most coins are poorly planned and run by con men. It's no surprise that things are slowing down
Just noticed this. Didn't think exaggeration or metaphor was beyond the scope of people's comprehension?
If we are talking about most coins, then its definitely true that they are poorly run. But surely you can agree that there are at least a handful of technologically interesting crypto projects. For example Sia
And what exactly do you consider as "sinful impact"? Everything that you personally consider "bad" for some reason?
See above. The comparison was to what the crypto boom has done to GPU prices.
Sia seems mildly interesting, but I don't see what purpose it fulfills that self hosting does not. It introduces several complications to what should be a fairly straightforward process, and keeping your files on the Sia blockchain would really limit what you are able to do with them without introducing even more complicated steps. Like if you wanted a hosting solution that could act as a database, or a simple webserver. It seems like just another way to get people to buy into a specific crypto currency.
Get rid of the crypto currencies, and use the blockchain for more reasonable things. At least in Canada, there would be merit in having every hospital acting as a node on their own private blockchain so they could share patient information. Make sure that if someone is hospitalized outside of their usual location, they aren't given something that they're allergic to. Blockchains are largely just privatized, highly redundant networks for data exchange and tracking. I think what people outside of investors seem to be truly drawn to is that idea of privacy and data ownership. Fediverse and self-hosting align closer to these ideals
In other words, it's designed to provide pay-off to those who jump-in early, as long as they convince more people to jump in, and assuming they get out early enough.
Well, I don't what we call a thing that manipulates them. Sure, it's not called a "central bank". But clearly cryptocurrencies can be manipulated:
Not to mention manipulation by dudebros like Elon Musk, whose one tweet can just send cryptocurrencies up or down like a roller-coaster.
And yet pleny of cryptocurrency people ask 3rd parties to store their assets for them. Which leads to pain.
Also, with cash you also also technically don't need physical coins. Banknotes are a thing, you know. 😜
Well, as long as you pay the exorbitant transaction/gas fees (which are there because the supply of particular cryptocurrency is capped, and so some form of rewarding miners is needed, apparently), and if you can afford to wait sometimes days for the transaction to be confirmed.
I mentioned Tether above, in that exact context. Consider the following:
Tether only holds a part (a "fraction") of the actual hard cash they would need to back it 1:1 with USD. You know how much? A whole 2.9%, last time they produced any numbers on it, as far as I can see. Everything else is commercial paper, bonds, etc. They are literally gambling on the stock market with their supposed "backing cash". This is basically what the Big Banks were doing before the 2008 crash, by the way.
Congratulations, you just invented (badly) fractional reserve banking. One of the core things cryptobros pinky-promised never to do. 🤣
No wonder people lost their minds when Tether de-pegged by roughly 5% this week!
Oh and by the way: Tether was in turn used to manipulate Bitcoin prices.
If all this is not "creating money out of nothing", I don't know what is. Think about it: one of the biggest cryptocurrencies out there, and pretty damn important one, literally just goes "I promise, just trust me" on the whole "every USDT is backed 1:1 by USD" thing, and everyone is just, you know, fine with that.
So far you have not named a single problem that cryptocurrencies actually solve. You mentioned a bunch of features some claim they presumably have, but not a single actual solved problem. It's like saying "cars are great, they have wheels, and you don't need a bus, and they come in all sorts of colors, too!" in response to a question "what problem do cars solve?"
Well, Financial Times might actually have a reasonably good understanding what a Ponzi scheme is. And so, here we are. The whole article is basically this scene from The Office, and it's finger-lickin' good.
The more I think of it, the more I come to the conclusion that cryptobros looked at the banking system and broader financial sector, correctly figured out there are a bunch of serious problems with them, and then misidentified the underlying problem as technology used instead of greed.
They are basically focusing implementation details instead of figuring out how to fix the actual source of the problem.
That's a good way of looking at it.
I guess part of the idea way taking the power away from the greedy people, which fixes one small part of the problem.
Part of it was fixing the implementation details, which solves another part of the problem. But yes a purely technical solution is not enough on its own. Bitcoin is not a magic bullet to solve greed. My answer below talks a bit about that.
It's way worse than that. Cryptocurrencies are a way to supercharge greedy and corrupt people, by giving them a powerful unregulated tool to play with. And all at a tiny cost of emitting thousands of tons of CO2 at a time when parts of India are already starting to become uninhabitable.
How many emissions do you think millions of bank employees cause with their cars, flights, heated houses, and general consumption? Particularly as most banks are located in the U.S, which has the highest pollution levels in the world. Surely thats much worse than mining farms.
This is hardly a reason to add more to that, is it?
Seriously. 🙄
Plus, the financial sector can process thousands of transactions globally per second. Bitcoin, on the other hand, about (checks notes) seven.
Here you go again, taking a weakness of a single cryptocurrency, and pretending that it applies to all coins. No point arguing with this nonsense.
Look, cryptobros have been pushing cryptocurrencies using cherry-picked "arguments" for years. I don't see why this can only work one way?
On a more serious note, I am quite tired of the moving of goalposts practiced by cryptocurrency shills. "Oh, no, that only applies to some coins, not all of them!", "hey, that one also only affects some blockchains!", "no no, you can't say that, there's this coin out there that happens to not have this one specific problem".
Somehow problems they point out with the financial sector are supposed to apply to the whole sector, but problems with cryptocurrencies are only ever relevant to one very specific coin and in no way should reflect on the whole scene.
Give me a break. 🙄
Also, nice evasion there, just ignoring the main part of my post, which was: the fact that some other industry happens to generate emissions doesn't make it okay to create a completely new source of emissions.
That's what you were doing though. Cherry-picking faults from many different currencies.
Your original point was that crypto-currencies have no value and are ponzi schemes. Have you been convinced to change your mind about those two things? They are concrete statements, strong arguments. So they are easy to prove/disprove.
I'm afraid the discussion has gotten too broad now. You would need to start a new thread for each point. Otherwise it becomes circular. For example several or your points here I've already answered in another part of the thread.
Yes there are risks when you invest money in cryptocurrency, just like there are risks in every investment. The market is also much more volatile than stocks, so I wouldnt recommend to put your life savings there. And to be honest, I have never seen anyone suggest that.
Yes, Bitcoin isnt really usable as a currency (unless you are rich). Has been the case for many years. There are many other coins that can be used instead.
Tether is not a real cryptocurrency, exactly because a single company has full control over the supply. Again, I wouldnt recommend you to invest your money in Tether.
Of course crypto markets are manipulated, just like stock markets are manipulated. If you dont know that then you are really gullible.
If it doesnt solve any problem for you, then you can simply ignore the topic. The rest of us will still discuss about it.
Lots of interesting links there. But the pieces of your arguments are so diverse, there is no single coherent answer. In the technological field so diverse, you can always find bad things, if you are looking for them.
I'll just answer the first and the last point.
Here you really are describing a Ponzi scheme. By this logic, every currency (with the possible exceptions of gold and bitcoin) are ponzi schemes. Central banks print banknotes (or X tokens) which are worthless. They only have value because people start to believe they have value. And the central banks use this confidence trick to make money. They more tokens/banknotes they print, the more money they make.
This does not describe a Ponzi scheme. It describes a fiat currency. "Ponzi was paying earlier investors using the investments of later investors". He created an investment fund, not a currency. There is no way you could confuse those two things. And a pyramid scheme is also an unrelated thing. But you're just as capable of looking this up as I am.
Have you ever sent money to someone outside the EU? Its very expensive, and takes a few days. With cryptocurrency you can make the transfer within minutes, and it costs a couple cents (unless you use Bitcoin of course). You shouldnt think of crypto only as an investment.
Oh not at all. I mostly think of it as a scam, with some Hoggish Greedly (ever watched Captain Planet?) type greed-induced crawling environmental disaster bolted onto it.
Sure. But I am sure we can find solutions that do not require buying into Ponzi schemes, if we just decide to focus on that, instead of on shilling said Ponzi schemes. 🤷♀️
Honestly one shouldn't dismiss this side of crypto. The relative ease of transfer is an important technological advancement.
Too bad the rest is riddle with that huge bug : mining reward...
Better mining rewards than wasting more money on bankers.
And you really think that banks are any better than crypto? In my opinion they are much worse, and I would be happy if they die out. Its true that the technology is in an early state, but there is lots of development in the area, and it will lead to improvements sooner or later.