Blockchain, Decentralization and Smart Contracts have had nearly a decade to prove their value and disrupt the marketplace. So far nothing but whitepapers, pipe dreams and exit scams - nothing my mother can use. What's the point? Nobody is using crypto as an alternative to fiat. Prove me wrong.
This is a very limited and short-sighted view on the emergence and development of new technologies.
From the first petrol engine (1879) to the Ford Model T (1908), the Arpanet (1969) to the Internet (1990), as also software development (Cyberpunk 2077 was developed over 8 years), these things have one thing in common: they need time.
When one day your every breath (and its payment) is recorded on a blockchain then you should be aware that such a technology capable to do so does not exist yet, but its basic features do.
Yes I know it is very short sighted, but I am very open to being persuaded. I'm not trying to be negative, just trying to look for the real world "value".
For some reason bitcoin apologists always use cars, and the internet, and other actual disruptive technologies and inventions. Even though with each passing day it looks more like radioactive health products [1]
it is noticeably peculiar to compare one of the most significant technical inventions of our century with a half-baked hair dryer.
such innovations only appear now and then, one should have the intuition to recognize them as such, otherwise he will miss the opportunities of such developments.
its worth a hundred dollars, people use it to buy goods - its a scam.
its worth a thousand dollars, people start using it as a store of value and a hedge against inflation - its a scam.
its worth 65.000 dollars, theres also ethereum changing the face of banking forever - its a scam.
calling me a scam artist while disregarding all the givens of reality, at this point its really hard to convey how extraordinarily mind-bendingly narrow-minded this point of view is.
Defi is only about 2-3 years old. It's indeed fair to say that bitcoin has completely failed in getting any adoption beyond speculation.
>Nobody is using crypto as an alternative to fiat.
Ethereum is the best way to save in dollars outside of the developed world. High single digit or double digit yields (powered by speculators borrowing to speculate) vs ~0% in the banking system. Also much safer. Not compared to an American bank, but to Russian/Lebanese/Brazilian etc.
The history of defi can be traced back to mid-2013 (mastercoin) or earlier (colored coins).
And what the cool kids are calling “defi” today was called “appcoins” and “utility coins” several years ago. It’s all just marketing spin.
> It's indeed fair to say that bitcoin has completely failed in getting any adoption beyond speculation.
Digital gold is a euphemism for speculative store of value. Gold itself is a speculative SoV. For Bitcoin, that’s a sign of success — which is reflected in its market price.
There is not one single cryptocurrency on the market today which isn’t a speculative store of value primarily by real world usage. Rather there is Bitcoin which is upfront about this, and then there are other coins whose skilled sophists promote it as being something other than a speculative store of value as a hollow front. Peak behind the curtain and you’ll find a speculative store of value in 100% of cases, absolutely without exception. If anything has failed here it’s the moral compass of altcoin promoters globally, and investors for being so easily misled by hype entrepreneurs.
>The history of defi can be traced back to mid-2013 (mastercoin) or earlier (colored coins).
I disagree. Defi started with lending and borrowing dapps. If just tokens themselves are 'defi' then bitcoin itself is defi, which would make the definition pointless. Finance requires lending and borrowing.
>Digital gold is a euphemism for speculative store of value. Gold itself is a speculative SoV. For Bitcoin, that’s a sign of success — which is reflected in its market price.
The title of the bitcoin whitepaper is 'Bitcoin: A Peer-to-Peer Electronic Cash System' which means it objectively failed in its stated goal. Of course, it had to, as bitcoin is not backed by anything and money must be backed by something.
Now it's just a ponzi scheme that continues to make people poorer while fooling them that they're getting rich. The only way to make a profit on bitcoin is to take someone else's wealth - it's zero sum by itself. On top of that there's mining, which ensures bitcoin continuously destroys wealth and makes bitcoin buyers poorer as a group compared to everyone else.
In developed countries, I can tap with my phone or card to pay instantly, there's Venmo, and fees are low-ish. Currently, no cryptocurrency has competitive advantages to traditional payments...unless it's illegal, but even then, certain cryptocurrences are a really bad choice.
Supposedly phone apps are used for payments in developing countries, but I'm not entirely sure.
I'm a huge proponent of crypto and the many things it's going to make possible that were not previously possible. But the developing country angle is oversold usually by people just parroting it without really knowing what things are like in developing countries:
1. In many developing countries increasingly you can also use phone or card almost as conveniently as you can in the west. In fact some developing countries are more advanced as far as mobile payments go (out of necessity because of less developed banking systems) e.g Mpesa in Kenya. Generally visa/bank cards and payment apps are not as alien as you might think they are in many parts of Africa or India or South America
2. Using Bitcoins for transactions/moving money around with the current state of the art is a lot more difficult and less accessible than using western union and other financial services that are ubiquitous in these places. Since at present you can't really use Bitcoin for much you still have to convert it fiat which means using an exchange. Most exchanges have even more onerous kyc/id requirements than banks and many financial institutions in developing countries won't even touch bitcoin at all. And not even to talk of the relative technical sophistication required to use crypto services let alone maintain a wallet. As far as developing countries go crypto-currency at present is mostly a curiosity among the well-heeled and well-connected in the largest cities. It's going to be a long long time before the promise of crypto bringing salvation to the un-banked comes anywhere close to reality.
Decentralization is good, but it’s almost by definition not profitable. It’s in centralization that you get profit (pre-mining is a bit like centralization).
BitTorrent: good, somewhat decentralized. Not super profitable.
Imagine if after TCP/IP was invented, people hoarded IP addresses and they became worth millions of dollars, but no one used the internet. If you pointed this out, they got mad at you for being a luddite or a noiper.
The reverse is sort of happening with IPv4. ISPs are pushing more and more people behind CGNAT where multiple people share the same IPv4 address. This is a problem because some video games (Terraria) don't support IPv6.
They use it to speculate. In the words of Mark Cuban, "Traders borrow to buy Eth, used eth to borrow alt/stable coin, used that to LP a high APY Pair, took the SLPs and staked them to maxout yield."
Whatever that means, this is the world they're building.
Crypto relies on the internet. It benefits from its adoption. It should be much faster. YouTube, Facebook, Netflix, Spotify, App Stores, etc. All of these advancements experienced rapid growth. Hell, even PayPal.
The internet built the network that made that rapid growth possible. Crypto is not reinventing the internet.
ArpaNet wasn't an internet until at least 1983 when the military network was split off, and commercialisation began.
10 years after that we already had Tim Berners Lee inventing www in a lab that was connected to a global communications network and routinely used by hundreds of thousands of people.
Prior to that, for example, France had Minitel which already had distributed services, email, payments, orders and so on: https://en.wikipedia.org/wiki/Minitel
I would argue that many NFT platforms (such as Hicetnunc.xyz[1]) have already successfully "disrupted" traditional artist marketplaces (such as Etsy, Shopify, Bandcamp, etc), despite being only popular for a short few months.
I think many other participating artists would agree, if these decentralized platforms continue to be more profitable for creators than traditional options, there is no need to 'go back' to centralized fiat marketplaces.
I think the real question is whether this will continue long-term, and whether decentralized paradigms (digital ownership, DAOs, trustless execution, etc) can still hold value for the average user even if there was no high economic return.
Maybe I'm wrong but I see this perspective so often on HN. And I can't help but feel that this is because so many people on HN are already privileged - living in the first world, making software salaries, and generally have a world of opportunities available to them, especially when it comes to their money.
But coming from a third world country, the promise of a decentralized, permissionless market seems extremely promising. Particularly if it doesn't restrict me because of my location or capital or identity.
If the internet broke geographical barriers, this tech can break barriers of capital and identity and credentialsm.
While I won't talk about the idealized vision of blockchains, smart contracts can automate away a large number of fairly complex interactions. There is already a pretty thriving decentralized financial market that anyone can access from any part of the world with any amount of capital - no KYC or questions asked.
A very basic usage: using Curve.fi to swap between tokenized USD (USDC) and tokenized EURO (EURS) with minimal slippage and fees, all permissionless, all freely accessible. If I was an American and wanted to have Euro to spend on my vacation, would this not be a better way to go about it instead of going to the bank, dealing with someone, and paying their exorbitant fees?
The only missing part is the ability to easily spend this tokenized EURO, but that - I'm hoping - will come later. The core tech - smart contracts, blockchains - work.
A more advanced use case: deploy tokenized USD into a vault that lends it out according to a set strategy, earning the lender interest passively. The individual who created the strategy, in term, earns a fee based on their returns generated. Again, this individual can be from anywhere and doesn't have to have a fancy office and degrees to get investment "clients". Nor does the lender have to deal with anyone to lend out their money.
If this tech allows Raj from India to build a "hedge fund", and for Joe from America to invest with as little as $1, and the two never have to know each other, and can interact entirely with a smart contract available 24x7, what's there not to be excited about?
In the serious crypto world, there is a maxim: Code is Law.
I would reckon that alone should make HN bullish on crypto. When was the last time you worked at a tech company where Code was truly the Law?
=====
Some links if anyone wants to explore this further:
1. Uniswap.org - anyone can set up trading between any two tokenized assets. Want to trade between the price of gold and Venezuelan Bolivar? Sure, go ahead and use the price oracles from Chainlink to create these two tokens, set up a trading pair, and allow anyone to speculate on these two assets. Or you can just be a market maker (something only big funds can do in TradFi) and earn fees on the trades.
2. Curve.fi - swap between tokenized stable coins, such as EURO > USD, without ever having to visit the bank or paying their fees or doing their KYC.
3. AAVE.com - Lend or borrow between tokenized assets
> But coming from a third world country, the promise of a decentralized, permissionless market seems extremely promising. Particularly if it doesn't restrict me because of my location or capital or identity.
Your entire argument is about the promise of blockchain and not the actual current applications people are using. Your argument is theoretical when OP is asking for practical use cases. You mention many hypotheticals but not a single "I use blockchain for X" or "my mother uses blockchain for X" which is what actually matters.
> While I won't talk about the idealized vision of blockchains
As far as I'm concerned that's all you talked about, and you don't even realize it.
I literally gave a real world example: Curve.fi that's used to swap between stablecoins. You can literally go right now to swap between tokenized USD and EURO.
Or you can go to the bank and pay their exchange rate. Maybe they'll ask you for your ID too.
Another example of the second kind: www.Ape.tax, where anyone can deploy an investment strategy and beta users can try them out, and if they are successful, they can be integrated - voted on by a DAO - into Yearn.finance, the primary project with several billion $ in investment.
There are existing projects already using the situations I talked about. It's not theory. It's not idealized vision. It's happening right now.
Blockchain is moving so fast that Yearn.finance, the platform with billions in investment, wasn't even a thing a year ago.
You gave a hypothetical example, not something you use. And to answer your question in your original post - no, blockchain would not be more convenient than using my traditional bank. I can do it entirely on my phone inside an app. And every time I've compared it's significantly cheaper not to use blockchain to send someone actual money.
You're giving me possible applications, not talking about you being an actual user. There are products for lots of things, that doesn't mean they have enough people using them that they're going to last.
> Blockchain is moving so fast that Yearn.finance, the platform with billions in investment, wasn't even a thing a year ago.
You're talking about something I've never heard of before as proof of blockchain having made it. We are on different planes here and I don't see us getting through to each other.
Much of HN is stuck in 2017 Blockchain era. Most haven't looked it serious since that crash. Many still think of Blockchain and can only think of BTC, LTC, Doge and ETH. DeFi is so new that it even caught HN off guard.
Much of HN is also middle of the curve and don't care/know about finance. Finance, financial engineering and P2P is a different beast compared to deploying bloated Docker containers running React frontends. It's a shame because there are a lot of smart people here that could help working on sustainable economics for fun and profit.
This seems to be one of the problems. The other is just a weird contrarianism -- many on HN want open source software and systems, but in no way do they want an open economy or money system.
Curve is just leverage for speculation: deposit token A, withdraw token B, earn the appreciation on both token A and B. Speculation is still the only use case.
DeFi provides absolutely nothing novel. Nobody said it wasn’t used. They asked for a non speculative, “real” use case.
By that standard, majority of Wall Street has no use case either, since much of the money is made entirely on speculation. Is betting on whether oil price will go up or down really that much of a use case?
Unless you count making money as not enough of a use case.
I give up though. HN will willfully ignore crypto and miss out not only on life changing money, but one of the few places in tech that is still fun and exciting and hasn’t been “corporatized”.
> By that standard, majority of Wall Street has no use case either, since much of the money is made entirely on speculation. Is betting on whether oil price will go up or down really that much of a use case?
Absolutely. Price is the single encapsulation of all information in a market. But this is only the case because oil is a scarce resource, which needs allocating, and efforts are made to ensure that markets are fair. That is not true for crypto.
However, your presumption about “mostly speculation” also isn’t true and just reeks of someone who has no finance experience. I’ve spent my career as a hedge fund trader, focused in commods. Oil markets exist principally for bonafide hedgers to exchange risk. I cannot tell you how important hedging is to global market efficiencies.
> Unless you count making money as not enough of a use case.
So then you're agreeing that the only real use case for crypto is speculation, and not something normal people should care about.
> By that standard, majority of Wall Street has no use case either, since much of the money is made entirely on speculation.
I think most educated people would agree that Wall St is a drain on society the same as targeted ads. The world is better without it. Are ads also useful because of how much money they make?
> HN will willfully ignore crypto and miss out not only on life changing money, but one of the few places in tech that is still fun and exciting and hasn’t been “corporatized”.
I really hope you're not so naïve that you don't realize crypto markets are being manipulated by big banks.
Right now, if I want to invest in US stocks, I have to go through a handful of local brokers. They want a minimum of 10k inr in the trading account. I have to clear kyc and get my account approved. Once approved, they can shut down the account anytime for any reason.
And all of these are recent developments - until a couple of years ago, it wasn’t even possible to invest in US stocks.
Alternatively, I can buy tokenized versions of popular stocks. This will be an erc-20 token that I will have full custody of at all times. I do not have to get “approved” or have a minimum amount in my account. I can be an investor in, say, AAPL with any amount of money from any part of the world. Unlike my own local stock markets that are filled with insider trading and subpar companies, I get to invest in and gain wealth from a more competitive market - without ever needing anyone’s permission.
Do you consider financial inclusivity a bad thing? Would you say that having control over your own money and removing gatekeepers is good?
I know plenty of people in India who trade US stocks and they don't have to put up that much in assets. You've made so many other factually incorrect statements I don't know if you're lying or ignorant but I know for a fact you're wrong.
For example, you mention foreign currency exchanges. According to Wikipedia, trading in foreign exchange markets averaged $6.6 trillion per day (April 2019). [1] Is there any indication that foreign exchange markets are moving towards adopting this trading of tokenized currencies that apparently is so much better than the system they're using now?
You're being disingenuous if you're trying to compare the mature foreign exchange market with a technology that's barely half a decade old and still obscure by most standards. Curve.fi, the example I shared, was launched in Jan 2020 and peaked at a daily volume of $1B.
Personally, I can't buy USD without going to the bank and filling out paperwork, submitting ID documents and clarifying why I need the USD and adhering to prescribed limits.
I have no such restrictions with their tokenized variants.
But you said it was happening right now... no you say it isn't happening, okay.
> I have no such restrictions with their tokenized variants.
Regulations don't apply because you're trading fantasy money. Once you try to exchange these virtual tokens for real money, then you will be required to comply with the regulations.
Have you tried to convert currency these days? I do it on my credit card for 0% at the Reuters fix window. If you actually go through your process above, it is so much more expensive.
> coming from a third world country, the promise of a decentralized, permissionless market seems extremely promising
> A very basic usage: using Curve.fi to swap between tokenized USD (USDC) and tokenized EURO (EURS) with minimal slippage and fees, all permissionless, all freely accessible.
As a sibling comment noted, this is hypothetical usage, and a future 'promise,' not actual usable by or providing value to the average person.
I went to curve.fi, and from a first glance, anyone not first-world, techie, and extremely familiar with crypto would be completely bewildered by this.
"Select a wallet to connect to this dapp" — what is a wallet and what is a dapp?
"Swap using all Curve pools" — what's a Curve pool?
"Trade routed through alusd" — what does this even mean?
"Base APY" — what? I thought I was exchanging currency, not opening a bank account?
"veCRV holder/LP ratio (based on fees): 28.74" — This is where even first-world, college-educated people close the website in confusion.
Agreed and it's expected, but the question posed was whether there's actual current instances of crypto helping people in the third-world, or whether it's just a bunch of hypothetical future promises of value.
Speaking as someone from the third world, absolutely.
I just implore anyone here to approach this with an open mind. There's lots of fraud, but that's also leading people to come up with newer, more exciting solutions. Like on-chain insurance (https://nexusmutual.io/) or tranches to compartmentalize risk (https://saffron.finance/) or creating entirely synthetic assets on-chain (https://synthetix.io/)
It's a weird space where finance and tech and design and culture are coming together, and frankly, it's the most fun I've had in tech in years.
Even though I feel that current valuations are grossly overheated, the stuff coming out on a daily basis is just a ton of fun.
Blockchain is what makes it freely accessible to anyone from anywhere without requiring a sign up or kyc or local presence.
For instance, I can’t sign up for a US trading account without a certain amount of capital, going through a specialized broker, and clearing certain KYC rules.
I can do all of that without ever needing to go through a single centralized authority. I can buy a tokenized version of TSLA stock without going through a broker and having complete and 100% control over my capital at all times.
Unless you consider financial inclusivity and free and open financial markets a bad thing, of course.
All the criticism is so first world centric and elitist
> Blockchain is what makes it freely accessible to anyone from anywhere without requiring a sign up
Except... You need to signup because there's literally no way to obtain anything on blockchain if you're not a miner.
Well, you could probably sell something for bitcoin, but then oops, you need to sign up somewhere to convert it into actual real money.
> I can’t sign up for a US trading account without a certain amount of capital, going through a specialized broker, and clearing certain KYC rules.
And there are reasons for that. And yes, similar crypto set ups quickly rediscover what those reasons are.
> I can do all of that without ever needing to go through a single centralized authority.
Until you pay for something and that something never arrives. Then you would be very glad to have a central authority.
> All the criticism is so first world centric and elitist
Ah yes. The tired old "but the poor people in poor countries" cries the person whose first example was "I can’t sign up for a US trading account without a certain amount of capital".
Because, as we all know, people not from the first world are flocking to open up US trading accounts and buy TSLA stocks.
> Well, you could probably sell something for bitcoin, but then oops, you need to sign up somewhere to convert it into actual real money.
Not quite, you can cash out BTC without going through any KYC. You can use non-kyc exchanges like hodlhodl, ATMs which just give you cash, or in person p2p trading.
> Until you pay for something and that something never arrives. Then you would be very glad to have a central authority.
Lol, you clearly do not live in a country with double digit inflation, government mandated bank limits, oppression. Cryptocurrency is literally saving lives in some parts of the world
> Ah yes. The tired old "but the poor people in poor countries" cries the person whose first example was "I can’t sign up for a US trading account without a certain amount of capital".
And you clearly need to workout that empathy muscle
> ou can cash out BTC without going through any KYC. You can use non-kyc exchanges like hodlhodl, ATMs which just give you cash, or in person p2p trading.
So, all options significantly more involved or less accessible to people than regular cash.
> Lol, you clearly do not live in a country with double digit inflation, government mandated bank limits, oppression
I have. Moldova after the fall of the Soviet Union. Then in Turkey which historically had ~100% inflation for most of its history and then a crash in early 2000s.
I lived through it all.
"You need to set up a wallet for a digital token, somehow buy it for real money, then somehow convert it into real currency" is not an option for the absolute vast majority of people even in the countries with high levels of inflation, bank limits etc.
If anything, cryptocurrencies are a very, very first-world thing.
The insoluble problem is that any system of the kind you describe where the final tokens are ultimately spendable will be swamped by criminal use.
If you make an end run around the existing regulatory system through code, the people who are inhibited from transfering money by the current regulatory regime will all use your new system. And that traffic will be overwhelmingly criminal.
The amount of illicit money needing to move is overwhelmingly larger than the sums that honest people are prevented from transferring by corrupt governments or unjust restrictions. That is going to doom any attempt at creating a parallel money transfer system that works at scale.
I think money transfer was Blockhain Era 1.0 use case. The use case has advanced - very rapidly - to money automation. This is all really new stuff, much of it barely a year old, and it has come so fast that even I've been surprised.
A smart contract can currently take your tokenized USD (we'll use USDC since its backed by Coinbase), use that as collateral to borrow ETH on AAVE.com (a lending protocol), use 50% of that ETH to buy up USDC again, use this USDC + ETH to create a liquidity pair on Uniswap, and earning 0.3% fees on any swaps made between USDC and ETH.
> A smart contract can currently take your tokenized USD (we'll use USDC since its backed by Coinbase), use that as collateral to borrow ETH on AAVE.com (a lending protocol), use 50% of that ETH to buy up USDC again, use this USDC + ETH to create a liquidity pair on Uniswap, and earning 0.3% fees on any swaps made between USDC and ETH.
And... What does this accomplish, exactly? Besides "get rich, quick, in virtual money that, for now, some folks will convert to real money, maybe"
This use case is gambling with extra steps, except the software that runs a slot machine is far better vetted for correctness than a smart contract.
Without money transfer, this system remains a toy system. With money transfer, it becomes a regulatory bypass. No amount of complexity layered on top fixes this.
Money transfer is impossible to stop as long as P2P exchange exists. My country banned crypto a few years back. I just bought in-person. Nigerian central bank banned crypto recently. Nigerians just exchanged it over Whatsapp
The fact that central bankers are busy banning it should give you an idea how disruptive it is.
The Nigerian central actually prohibited banks from facilitating or participating in crypto based transactions. You can still trade legally however you want.
Because its accessible from anyone from anywhere without requiring a sign up or kyc or any of the other hurdles that stop the flow of money and information between legal jurisdictions.
A banking and trading account where I can access multiple currencies without ever filling out a form or talking to a sales rep or being from the same country as the banking institution or passing some arbitrary credit check has to be worth something
I can’t buy AAPL here in India without going through a broker and clearing kyc and having certain amount of capital. I can buy tokenized AAPL that will sit in a wallet I control at all times, can buy with literally fractions of a dollar, and buy without ever going through a gatekeeper.
But again, you’re likely in the first world so it doesn’t matter to you. But here in the third world, people are willing to literally break local laws to access these markets.
hard agree on that one: it's a recipe for a cypto-hellscape.
You wouldn't know who to trust, and the time it takes to actually audit smart contracts for trust is enormous. What a joke.
The only missing part is the ability to easily spend this tokenized EURO, but that - I'm hoping - will come later.
I think recent history of crypto has shown this is not possible without KYC/AML/CTF and all the regulatory bells and whistles. Seriously capital flows tied to real economic activity cannot exist without identity, governments won’t allow it.
The emerging surveillance system in the traditional finance system, with the creation of FinCEN in the US in 1990, and FinTRAC in Canada in 2000, is massively centralizing power and can exacerbate financial exclusion:
The existence of crime and terrorism does not justify warrantless mass-surveillance. People in a free society have a right to privacy, including in their financial transactions, even if that privacy may facilitate some criminal activity they may choose to engage in.
Absent a criminal conviction, or at least a court's ruling that there is probable cause, they should be presumed innocent and secure in their right to privacy, not presumed suspect, and obligated to disclose private data as a condition for being permitted to engage in interactions with other private citizens.
Beyond this consideration for basic human rights and the foundations of a free society, by some accounts, KYC is the most ineffective policy experiment in history:
Nothing stopping you from using a P2P exchange to turn that Euro into hard cash if you don't want to go through the KYC/AML. In fact that's exactly how I bought my BTC after the government here banned it.
I mean on a larger scale. The great promise of crypto, A billion plus “unbanked” people turning to a crypto enabled shadow banking system, will not happen without drawing the attention of the eye of sauron
>> Shouldn't the fact that central bankers want to ban crypto make you think that maybe there's something here more than ponzis and scams?
Note that I do not support Gov banning crypto.
I see two things:
1. That there's a legitimate threat to their power and existence which they would do anything to mitigate.
2. Also, it could be that majority of their population are being exposed to unhealthy risk.
Take the case of Nigeria for example. MMM a ponzi scheme rocked the country in early 2017. People lost a total estimate of about 18 billion Naira (or $60m as of March 2017)
>> In the serious crypto world, there is a maxim: Code is Law.
Yeah, what's this thing of code is law. I was discussing with a friend today on how governments might have to come in to regulated some financial transactions with crypto based assets. And he vehemently kept repeating that no government can regulate crypto because "code is law". We went down to the physics level to see why it's not impossible to do. Only for me to come here again and start seeing code is law. High time someone explained it better.
When you put money in your bank account, where does it go? Who uses it? When you purchase shares, where do they come from? How many market makers were involved? How much profit did they make front-running your purchase?
All these things are currently completely opaque to the average person. Decentralized Finance fixes this. Every transaction and system you interact with is completely open source, transparent, and fair for everyone involved. There are no rich and powerful people taking a cut of your money every time you use the system, as it is in traditional finance.
You can see the exact code doing what you want done, and nobody can stop it doing that, or change the rules part way through (see: the Robinhood GME saga)
Traditionally the government set the rules, but the government can be corrupted. Most people know that wall street regularly breaks the law if the profit they make will be greater than `fines they pay * risk of getting caught`. Until now there was nothing we could do about this. Code can't be corrupted in the same way.
> All these things are currently completely opaque to the average person. Decentralized Finance fixes this
Code is opaque to people as well, most SWEs struggle to understand distributed systems that are using consensus protocols much simpler than byzantine fault tolerance, or programming on environment are non-adversarial, unlike solidity. You can't just learn solidity and then trust smart contracts, it takes a lot of knowledge to avoid vulnerabilities.
> Code can't be corrupted in the same way.
If you think this, you might be in your a rude awakening. "Code" is being used in crypto-currencies for corruption all the time, and there is no inherent property of computers that protects you against malice, theft and vice.
I personally don't want to live in a world where I need to audit the code for every financial transaction I'm party to, and fortunately I live in a country with a mostly working legal system that already handles this for me.
> Code is opaque to people as well, most SWEs struggle to understand distributed systems that are using consensus protocols much simpler than byzantine fault tolerance, or programming on environment are non-adversarial, unlike solidity. You can't just learn solidity and then trust smart contracts, it takes a lot of knowledge to avoid vulnerabilities.
It's open source vs closed source arguments again. I have personally never looked at the Linux Kernel or Ubuntu source code, but I trust it more than I trust Windows because I know many thousands of people have looked at it before me and said it's secure.
> "Code" is being used in crypto-currencies for corruption all the time, and there is no inherent property of computers that protects you against malice, theft and vice.
I'm sure it is, code can also be used to create viruses and malware but that doesn't mean Linux is insecure. It's about the transparency of the code and systems you use. More transparency = more trust = better outcomes. I'd rather live in a transparent, fair world, than one where those with more power and money get to set the rules and hide the internal workings from everyone else.
It essentially means that the Code is the product. Everything is visible and public. Every smart contract can be publicly viewed and verified. If the code isn't up to scratch, you can review it. If it has an exploit, you can detect it. Whatever it is doing, is transparent.
You can't say the same when you deposit money into, say, Robinhood. You don't know what the code is doing with that money.
>> You can't say the same when you deposit money into, say, Robinhood
How do you know what the major exchanges are doing as well?
By the way, how did the exchanges wind up becoming so powerful and rich. Becoming almost a parallel Wall Street, just a smaller one, in a system that was supposed to ultimately democratise power. Some people with resources managed to emerge at the top in decision making...
Centralized exchanges are a necessary evil for now. DeFi (Decentralized Finance) is where code is law. Services like Uniswap, Curve, Aave etc are all just code that you interact with on Ethereum. Once you've onboarded into the decentralized world you can use them at will and eventually you'll be able to live your life without having to use centralized services again.
> Centralized exchanges are a necessary evil for now. DeFi (Decentralized Finance) is where code is law. Services like Uniswap, Curve, Aave etc are all just code that you interact with on Ethereum.
Code is not law and I doubt it can ever be. IIRC ethereum even had that saying on their web page until that stance threatened to lose a lot of money to people with power within ethereum.
You don’t have to use an exchange at all. Decentralized exchanges have been around for quite a while and have massive volume. And their governance is entirely controlled by DAOs
> the two never have to know each other, and can interact entirely with a smart contract available 24x7, what's there not to be excited about?
I tell you that I'm totally going to follow what a program tells me and you should give me your money to earn interest. Are you excited about the possible interest from this uninsured, pinky-swear promise exchange?
> I tell you that I'm totally going to follow what a program tells me and you should give me your money to earn interest. Are you excited about the possible interest from this uninsured, pinky-swear promise exchange?
It's a smart contract. You can review it publicly. If there are vulnerabilities, if the ownership is not renounced, it would be visible. Can you say the same about your investment bank?
You don't have to trust the coder or the platform or the exchange. Code is Law. Trust the code.
But the smart contact cannot interact with real world. It's the party on the other side that ultimately gets the funds and acts on your behalf. That party can just take the money and go away.
Unless we're talking about purely on-chain strategies. But in that case why wouldn't you copy their public investment contract and execute it yourself?
> Can you say the same about your investment bank?
My investment bank has a tonne of regulation on it. If they go under and I can't claim insurance on it, then we have bigger issues where "money" may not be an answer anymore.
The workers also would be liable to local laws if they tried to literally walk away with money. (Sure, we have various enforcement issues, but the alternative of none-of-that doesn't sound great)
All real and legit concerns. Fraud remains a big problem which is why returns are so high right now - we're all early adopters.
But there are new developments constantly. On-chain insurance against smart contract failure and hacks is a thing (see: https://nexusmutual.io/). More sophisticated insurance strategies to compartmentalize risk are coming up (see https://www.unn.finance/). Protocol design to reduce risk exposure are being experimented with (see: https://saffron.finance/).
It's all new and all very exciting. It's moving very fast and its really fun to be in. I haven't been this excited by anything since the early web.
I can see where you're coming from. It is an opinion I have from privilege - I don't live a privileged life but I don't struggle either (middle income bracket).
After reading your use cases I do have empathy for people in those situations, where governments and centralized agencies are corrupt etc - just not entirely sure this solves any of that.
man even if you're not a believer in the utility of it all, simply participating in crypto right now is loads of fun. Its a weird space where finance and culture and tech and design come together. For every fraudster, there are 10 people who are genuinely excited about this space and have a true hacker spirit.
I haven't seen that kind of energy on the web in years - so much of it is cleaned up and coporatized. Crypto is still wild and interesting and fun.
You can even consider entering it purely as a hobby - that's how I did, and ended up talking to developers about, say, creating undercollateralized synthetic assets that hold peg to their real world assets by constricting/increasing asset supply at timed intervals.
I am using Bitcoin as money and there are a lot of people like me. Just by saving in Bitcoin is using it. The primary purpose of money is to save your purchasing power. From my viewpoint, it is inevitable that Bitcoin replaces fiat currencies. Given free markets, people will eventually choose the most sound money.
The dynamics of mining make this impossible. If Bitcoin were worth millions, then miners could spend millions on electricity to find each block and still make a profit. And because they're competing with hashrate, they would do exactly that.
If you do the math, you'll find that basically all electricity would go to mining.
Before we would get to that point, the electricity price would start going up of course. For everybody. And guess what governments will do when the population starts rioting because they can't afford electricity? They'll ban all proof-of-work coins. Maybe all crypto just to be on the safe side.
If the max amount of Bitcoin is 21mio and we assume that a huge chunk of the economy will be payable with these Bitcoin. Then on Bitcoin has to be worth (at least) 1/21mio of that economy chunk.
That is one way to estimate a maximum possible value.
My point is that by assuming "Bitcoin cannot consume more than X % of all electricity or there will be trouble", you can calculate another maximum value which turns out to be much lower.
In fact, if you assume Bitcoin can consume no more than 1% of all electricity (before regulatory trouble starts brewing) and electricity costs 0.05 USD/kWh, then you get a maximum price which is pretty close to the current price.
I have responded to a thousand versions of your comment on HN. No matter what I write the haters never change their minds. HN is not an enthusiastic place for blockchain devs.
Perhaps we don’t change our minds because we haven’t seen a convincing counter-argument to the thesis that blockchains are fundamentally about getting rich quick through buying in early (or pre-mining) and then finding greater fools.
The most successful actual applications thus far, as far as I can tell, have been silk road and paying ransoms.
I know people that send money home and they don’t use cryptocoins. These remittances communities are savvy and price sensitive, if there was a superior product it would be spreading like wildfire.
Polymarket is centralized, but one benefit of it is that you can sign up and fund your account anonymously (though you do require an email). Users are not restricted by state or national laws.
On a true decentralized gambling app, email would not be needed, just wallet. It would also be difficult to regulate (the team behind it could be anonymous).
And I'm not saying this is great or anything, but it shows how you can build something with a blockchain that you could not otherwise.
That's because many of us already have changed our minds. Many of us were big fans of Bitcoin ten years ago and really excited about the prospect of trustless digital cash. We thought it would work. But now that a decade has passed, we've changed our minds.
I'm not a hater. I am just applying some critical thinking and design thinking to try to figure out where the value is in all of this to the customer. I am happy to say I'm wrong, and happy to backflip.
https://curve.fi/ - for exchanging different tokenized stable coins (such as USDC > EURO). Already has over $300M in daily volume exchange.
https://yearn.finance/ - a platform where anyone can code and deploy an investment strategy, provided it is voted on by people who hold the platform's governance tokens. Already has over $3B in assets locked in. Good idea to look at their governance platform as well: https://snapshot.org/#/yearn
https://aave.com/ - a platform to borrow or lend your tokenized assets. Already has over $9B in assets invested
1. P2P exchanges can happen in cold hard cash. No bank account necessary.
2. Bitcoin is barely a decade old. Ethereum was launched in 2015. Most of the DeFi core projects were launched in 2019-2020. This is extremely early stage and comparing it to the ease and convenience of legacy financial systems is a little disingenuous. It might be complicated currently, but it works.
I give up. All I see on HN are people who’ve somehow dismissed an entire new tech sector without even being curious about it. The arguments are trite and shallow.
At the very least, if you are on HN, I expect you to be curious about the technology and make up your mind after satiating that curiosity.
> All I see on HN are people who’ve somehow dismissed an entire new tech sector without even being curious about it.
If I found a new animal species that walked and talked but lived using photosynthesis, I'd be asking all sorts of questions. "Does it breathe? Does it need water? Why does it need sun to live?"
So here we are now asking a bunch of questions and seeking clarifications.
> At the very least, if you are on HN, I expect you to be curious about the technology and make up your mind after satiating that curiosity.
"No true scotsman"...People are being critical because they ARE curious about crypto. How do you expect people to "make up their mind" when "Most of the DeFi core projects were launched in 2019-2020". That's exactly the issue.
But again, to those reading this thread, HN is not a place where you will find a lot of people who patiently defend crypto and blockchain. It garners a lot of downvotes.
>> But again, to those reading this thread, HN is not a place where you will find a lot of people who patiently defend crypto and blockchain. It garners a lot of downvotes.
Blockchain is a wonderful piece of technology. IMHO I do not think anyone really has personal beef with the technology. I think majority really want to understand, and if they're asking and posing questions it is because do not understand. There might be some that have their skin in it going south but I doubt that's the situation of many.
People really want to understand its use case as money.
That's because on HN we know that 99% of the blockchain hype is about people discovering asymmetric cryptography and pretending that the blockchain is the only way to use it.
The only real difference that blockchain solutions bring is decentralisation. I have to yet hear one single argument about why decentralisation is good. So far I have only heard the typical libertarianesque arguments about states, banks and inflation. As as I'm concerned, decentralisation is unnecessary and so are blockchain.
Well I’m a libertarian and an Austrian economics / hard money enthusiast so I grant that my love of crypto is influenced by my politics. If you are a statist that loves government authority, its benefits will be be drawbacks as decentralized money is an obvious attack on state power.
The power of decentralization is to reduce the power of centralized entities. Even within decentralized networks, centralized nodes (companies) gain power. But in decentralized networks you can choose alternatives. In state-run networks, your only option is the state as guns prevent competitors. I like free markers / free minds / private wealth / private power.
If HN was around in 1997, I bet half the comments would be about "internet is just scams and porn. Where's the use case apart from checking the weather?"
Wait, let's keep using this analogy. If the World Wide Web was invented in 1991 and by 2002 no one had created useful websites besides marketing for scams, drug marketplaces and sites to pay ransoms to, and the energy consumption of the World Wide Web was the country of Argentina... Wouldn't the critics have a pretty good point?
https://curve.fi/ - for exchanging different tokenized stable coins (such as USDC > EURO). Already has over $300M in daily volume exchange.
https://yearn.finance/ - a platform where anyone can code and deploy an investment strategy, provided it is voted on by people who hold the platform's governance tokens. Already has over $3B in assets locked in. Good idea to look at their governance platform as well: https://snapshot.org/#/yearn
https://aave.com/ - a platform to borrow or lend your tokenized assets. Already has over $9B in assets invested
Please see this with an open mind. And please see this from the perspective of someone not from privilege, from a third world country, or from someone facing an oppressive regime.
Money is freedom. And making that freely accessible to anyone from anywhere is important.
On January 29, 1886, Carl Benz applied for a patent for his “vehicle powered by a gas engine.” The patent – number 37435 – may be regarded as the birth certificate of the automobile. In July 1886 the newspapers reported on the first public outing of the three-wheeled Benz Patent Motor Car, model no. 1.
> The first production of automobiles was by Karl Benz in 1888 in Germany and, under license from Benz, in France by Emile Roger. There were numerous others, including tricycle builders Rudolf Egg, Edward Butler, and Léon Bollée. Bollée, using a 650 cc (40 cu in) engine of his own design, enabled his driver, Jamin, to average 45 kilometres per hour (28 mph) in the 1897 Paris-Tourville rally. By 1900, mass production of automobiles had begun in France and the United States.
So, 11 years after production started, gas-powered cars were not only rather common, but there were rallies involving them.
> 11 years from introduction, no one has come up with a use-case for blockchain
This seems an odd claim to make. Currently there's hundreds of Cryptocurrencies using blockchains as a foundation, and more than half a trillion dollars tied up in them. Right now it seems like they're at least speculative investments. If this does not count as a use-case then we'd better break the news to essentially all of finance.
Years ago before the values jumped you could do plenty of actual currency things with cryptocurrencies: there were ATMs, you could buy beers at a pub or pay for server hosting (something I did myself), etc. Because of all of the speculation cryptocurrencies have generally become too volatile for that. Nobody wants to find out at the pub there was a market crash and they can't cover their outing. At the time though, it all worked and had incredibly low transaction fees.
Then there's the applications for areas like logistics, supply chain, that are all under development. IMO it has absolutely established itself as a technology and like everything new people were quick to try to apply it to every problem and found it largely didn't fit most places. That doesn't mean it isn't useful.
You can take any obscenely inefficient technology and apply it to anything and say "look, it's useful", but that doesn't make it a good idea or viable or really even not pointless.
I heard it best put as: blockchain provides trustlessness at very high operational cost -- do we have a business case where trustlessness is a competitive advantage? If not, just use a database or equivalent
So like yes, you can implement insurance and messaging and contracts with blockchain. Is there a need to do that? Does it make sense? Would that business work? (Zero percent of such businesses have worked)
The sending money part is certainly a legitimate use. Unfortunately it's being totally broken by speculation on all the coins (not to mention high gas).
> So like yes, you can implement insurance and messaging and contracts with blockchain. Is there a need to do that? Does it make sense? Would that business work? (Zero percent of such businesses have worked)
The tricky part of this, of course, is in the Bitcoin space “validity” hinges upon valuation. Unfortunately cryptocurrency valuation is based on narrative entirely, and narratives continue driving trading volumes even in the face of undeniable technological shortcomings, see e.g. the saga of continual unstable “stablecoin” implosions, or Ripple.
> Because of all of the speculation cryptocurrencies have generally become too volatile for that.
So, the great amazing disruptive technology that is going to completely change the world... broke as soon as a tiny fraction of the world start paying any attention to it.
> Then there's the applications for areas like logistics, supply chain, that are all under development.
Literally none of those applications require blockchain, and blockchain solves literally none of the problems in those domains.
> That doesn't mean it isn't useful.
You'd think that the great amazing disruptive technology that is going to completely change the world would actually show some useful applications by now.
> So, the great amazing disruptive technology that is going to completely change the world... broke as soon as a tiny fraction of the world start paying any attention to it.
This is shifting the goalposts massively. The original comment was that there was no use-case for Blockchain. You are also talking about a component of cryptocurrencies as if they were the whole. The issue with the viability of cryptocurrencies is not tied to the blockchain but rather human investor behaviour.
> Literally none of those applications require blockchain, and blockchain solves literally none of the problems in those domains.
I'm not sure what you've imagined the applications in question are but you appear to have invented them and decided they don't work; I didn't provide any specific examples.
If you want a specific example of where it's addressing things and is being put to use: Provenance. If you don't mind a bit of dry reading the ieee has a decent writeup on the value this provides and the problems it can address: https://ieeexplore.ieee.org/document/8909921
We're literally in a comment thread to a comment that compared blockchains to cars. And that was made as an argument against "blockchains are not disruptive".
> The issue with the viability of cryptocurrencies is not tied to the blockchain but rather human investor behaviour.
It doesn't matter. If the only thing that people are doing with this "amazing tech" is speculation, that's all it's good for.
> I'm not sure what you've imagined the applications in question are but you appear to have invented them and decided they don't work; I didn't provide any specific examples.
Indeed, you didn't. Because blockchain apologists very rarely do, since for 100% of cases the proposed blockchain solution doesn't solve the posited problem.
What you did say though was "Then there's the applications for areas like logistics, supply chain, that are all under development". And all the ones that I know of have exactly zero need for blockchain, and blockchain solves none of the problems in those areas.
> If you want a specific example of where it's addressing things and is being put to use: Provenance
1. Doesn't need blockchain
2. Blockchain doesn't solve the problem of "ensuring integrity of food labeling and efficient management of quality and contamination issues."
Let me quote from an article [1]
=== start quote ===
An illustration of the difference: In 2006, Walmart launched a system to track its bananas and mangoes from field to store. In 2009 they abandoned it because of logistical problems getting everyone to enter the data, and in 2017 they re-launched it (to much fanfare) on blockchain. If someone comes to you with “the mango-pickers don’t like doing data entry,” “I know: let’s create a very long sequence of small files, each one containing a hash of the previous file” is a nonsense answer, but “What if everyone keeps their records in a tamper-proof repository not owned by anyone?” at least addresses the right question!
...
It’s true that tampering with data stored on a blockchain is hard, but it’s false that blockchain is a good way to create data that has integrity.
...
Blockchain systems do not magically make the data in them accurate or the people entering the data trustworthy, they merely enable you to audit whether it has been tampered with. A person who sprayed pesticides on a mango can still enter onto a blockchain system that the mangoes were organic.
=== end quote ===
Bute yeah, the article does have a high "bullshit hype per number of words" ratio: Blockchain! Internet of Things!
> It doesn't matter. If the only thing that people are doing with this "amazing tech" is speculation, that's all it's good for.
This is a ridiculous statement. When electricity was first developed all it could do was kill animals. Does that mean that's all it's good for?
Because the current most popular use of it is something you've personally deemed as "not a use-case", phrasing which you have moved away from.
> Indeed, you didn't. Because blockchain apologists very rarely do, since for 100% of cases the proposed blockchain solution doesn't solve the posited problem.
This is inappropriate. I could easily have dismissed your initial arguments as simply being a blockchain hater and we'd get precisely nowhere.
> 1. Doesn't need blockchain
> 2. Blockchain doesn't solve the problem of "ensuring integrity of food labeling and efficient management of quality and contamination issues."
This is a silly argument. Many things don't need electricity but electrifying them made them useful for certain new use-cases. Similar with Wifi, Bluetooth, etc. It's hardly "useless" to stick bluetooth and batteries into headphones but you can absolutely have them without it.
The idea that something doesn't "need" a technology has never been a driver of whether or not uses exist for applying that technology to that thing.
I provided a review of the data from the IEEE, a recognized industry standards body.
From the article you supplied:
> It didn’t take long for that dream to fall apart. For one thing, there’s already a costless, instant way to exchange value without a middleman: cash.
How does one exchange cash seamlessly and instantly with cash from say, California to Germany?
In the rest of that paragraph the author suggests that bitcoin wouldn't work but VISA and MasterCard absolutely can.
What happens when VISA or Mastercard decide to cease business with an entity? Why is it okay to require a percentage to process transaction fees rather than a standard fee? How is a percentage with minimum cost model (Visa/Mastercard/Amex/etc.), which the author lays out later on about microtransactions, better for the business owner or the user? There are no sources on those particular points, there's no clarification as to why it's a superior system, the author doesn't discuss the history of the systems at all, etc. It's very lacking in context, research, and salient factual points.
In fact, almost every following example provided in the article falls into this trap: "Company X can already do this! blockchain was never needed" -- that is a poor argument.
To view that blog post as a reputable source seems very strange to me. If that view is where you're sourcing most of your opinions on the usefulness of blockchains, then I'd suggest looking for other viewpoints. I'm unsurprised that some in the financial industry don't want a nearly-free way to send money around the globe instantly, just as I would be if someone working at a large crypto exchange was spouting off about how cryptocurrencies are simply the greatest thing around, ever and you should sink your life savings into them.
