You can see the state (volume, # daily users) of some of these promised "dapps" here: https://dappradar.com . It is indeed a barren wasteland. And when a new popular ICO comes along, the Ethereum network struggles and fees skyrocket.
It's weird because people compare it to the early days of the Internet... but the early Internet was useful from its beginning: you could at least send messages and files across the network, which was incredibly useful to academia and the military and was orders of magnitude more efficient than any alternative.
Now, all we see is rampant fraud and a complete disregard for the environment [0] with no gain in efficiency. It's high time we hold "crypto-anarchists" accountable for these issues.
>>It's weird because people compare it to the early days of the Internet... but the early Internet was useful from its beginning
Exactly why so much wealth was created by the Internet boom. The wealth came from utility that already existed, just needed to be harnessed to its fullest potential. ICO scams are based on generating wealth first and hoping that utility follows at some undetermined time in the future.
It's all snake oil. Maybe snake oil can be useful to someone at some point in time, but until then it's still just a scam.
I ran a 13TH mine of KNC Neptunes and Jupiters in 2014. I failed up from a deal where I designed boards for Avalon ASICs, set up the production pipeline, then the chips got stolen by the Chinese government (as far as I can tell), and my chip broker paid me back in BTC when it was at about $12. Then it shot up... $200... $300... I REALLY wanted to run a mine and I got in through a friend early on the Neptunes. They were late and gave us a bunch of Jupiters they had already mined to death. Eventually our Neptunes showed up. I got the office in my little rental house wired up with some 220 breakers and turned my tiny house into a space heater. I had to insulate the windows in this front office that got the August setting sun. I literally had to let my neighbors in for a tour so they knew I wasn't growing weed. They were not really convinced I wasn't doing anything illegal. When the sun hit, I had to put misters on my 2TON window AC unit so the room wouldn't heat soak. That was in addition to the 2TON that already fed the house.
I couldn't get people to sign mine share contracts with me to support the operating costs, I ended up spending most of it on my power bill, food, and my therapist (that sounds like it's a joke, but it's not). At the time my tiny run-of-the-mill software consultancy barely kept it's head above water. This thing actually put me deeply in the red. Texas summers. heh.
All the people I offered those mine shares to have called me this year thinking I was on to something! I wasn't on to something, I lucked into a situation and did something with computers that I liked. I didn't hold shit. I regret nothing. After the 2014 crash, everyone was saying "I told you so!" and I had some bills to pay. Jokes on them, I had a blast.
I really love what blockchain can do for consensus. I love that ETH can be used for address resolution outside of DNS. I love what is happening with IPFS. There is so much growing out of this that is good.
A partner in my mine got me on a call a year and a half ago with a friend of his from Bloomberg. The call was (from my perspective) supposed to be about my AR GIS platform. It turned out the dude was specifically a crypto journalist and had a stake in a Puerto Rico "Crypto Hedge Fund". Whatever that is. To his surprise, I had no opinions on hot coins!
Unlike the internet, the first "killer app" for this was about literally printing money. It's not a fair comparison. The real work that is happening with decentralized systems around this stuff is happening quietly. How many of you are listening to podcasts about DNS? People want to get rich quick. Sharks love to eat people that want that. It's a shame people got shucked.
Last year when people decided to give me calls about it, especially friends and family, my response was "How much do you know about cryptography? How much do you think you understand this stuff? I barely understand it. In my opinion, no one really understands what we are doing or what we are capable of with it. That doesn't make it an investment. Stick your money in an index fund."
My superpower: Taking things literally. Still more useful than the last 10 ICOs. And my bad jokes aren't as bad for the environment. 10k joke-coins pre-ICO and 2 downvotes for that one for me!
We had three innovative ideas in the financial sector - certificate of debt, compounded interest and book money. And now the fourth - trolling idiots to risk their retirement money because they want to get rich "with that computer money my son told me about".
You don't appear to actually understand what the phrase "snake oil" means in English. It doesn't mean "snake oil isn't useful".
It means: during in the 1800s Chinese immigrants to American used snake oil (from the Chinese water snake; the one in your link) as a cure-all. Unscrupulous "snake oil salesmen" would sell what-they-called-snake-oil-but-actually-wasn't. Or it used rattlesnake oil instead of water snake oil.
> It's weird because people compare it to the early days of the Internet... but the early Internet was useful from its beginning
That really depends on where you put 'beginning'. But more to the point, blockchains are useful now, just like the internet was. They're just not useful for all the things that are being promised (yet). Also, just like the internet wasn't.
> Now, all we see is rampant fraud and a complete disregard for the environment [0] with no gain in efficiency.
People never tire of pointing this out. Yet it completely ignores the fact that there are solutions to this problem that are in the works, and have been planned for a long time.
There are lots of problems with the crypto space. Fraud is rampant. Energy consumption is wasteful, temporarily. It's also not clear that dis-intermediating human institutions is actually what we want to do. But if you think it's all a fraud, or that there is no value, then you're just not thinking very hard.
1. What if we put "beginning" as in "before it was even called the Internet"? Indeed, ARPANET, which came online in 1969, saw fast growth in the United States in the 70s. Nodes came online to use it, not to make a quick buck. The government subsidized it because its potential use was obvious. Email started being used in 1972, FTP in 1973. To compare these world-changing technologies that were invented and used merely 5 years after ARPANET came online to CryptoKitties, which is the most useful thing to come out of a decade of work on blockchains, is a joke! And it's barely funny!
2. Of course the effect on the environment will continue to be pointed out: Ethereum's energy consumption is growing and the use cases are nowhere to be seen. So far, "plans" in the cryptocurrency space never go as expected. Satoshi didn't expect persistent forks and altcoins, for example. Vitalik advertised Ethereum as a "world computer" but it can barely stand when only 14k users are trading cartoon kitties on it. He also said Ethereum's "code is law", until he changed his mind and forked the network due to a hack. Please excuse skeptics for holding accountable those that do not have a history of consistent and successful results.
> Nodes came online to use it, not to make a quick buck
Thereby allowing use and feature development to proceed hand in hand. That synergy between makers and users is wholly non-existent in the crytocurrency space, which is primarily focussed on flipping a quick buck.
> What if we put "beginning" as in "before it was even called the Internet"? Indeed, ARPANET, which came online in 1969, saw fast growth in the United States in the 70s. Nodes came online to use it, not to make a quick buck.
People use cryptocurrency too. For value transfer, and to a more limited extent, for dapps like Augur. You seem to be criticizing the delta between the lofty hopes for it and it's actual usage. The early internet did not have such lofty hopes, so its growth was more organic. If you take away the pipe dreams from crypto, you have a remnant skeleton that i'd argue very much resembles the early internet.
> Of course the effect on the environment will continue to be pointed out: Ethereum's energy consumption is growing and the use cases are nowhere to be seen. So far, "plans" in the cryptocurrency space never go as expected. Satoshi didn't expect persistent forks and altcoins, for example. Vitalik advertised Ethereum as a "world computer" but it can barely stand when only 14k users are trading cartoon kitties on it. He also said Ethereum's "code is law", until he changed his mind and forked the network due to a hack. Please excuse skeptics for holding accountable those that do not have a history of consistent and successful results.
So, I said there are plans for solving the energy consumption issue. And your counter-argument is what, exactly? That sometimes people didn't foresee everything that might evolve? Help me understand the argument that you're making here.
> The early internet did not have such lofty hopes, so its growth was more organic.
People forget that in the early days of the Internet and its predecessors, most computers were still bigger than a washing machine, mostly available only to universities and big or specialized corporations, and data lines were limited to bandwidths many orders of magnitudes narrower than today.
The Internet had an inherent hard limit on scale and availability simply by the technology that was available at the time. Not only did the Internet then grow with the available technology, filling it out, its very nature provided a great lever to all research and development, leading to the exponential advancement of information technology that we live in today.
> The Internet had an inherent hard limit on scale and availability simply by the technology that was available at the time.
All technology is limited by what is available at the time. I am nowhere near as bullish as I used to be on “blockchain” but I still think it can have a huge impact. If the internet democratized informatiom the blockchain has the potential to democratize finance and some types of information. The internet had all kinds of crazy scammers during the dotcom era. I think there is still potential here and while the shape isn’t super obvious I think it’s not worth betting against. Im no koolaide drinking crypro cargo cultist but I am optimistic it will solve some problems and be a net positive.
Bitcoin's total TPS is circa 2-3. [1] And presumably a small fraction of that is actual money transfer. In contrast, M-Pesa, a digital money system that started about the same time and has millions of users, has 100x that volume and is growing rapidly. [2]
So I'm entirely skeptical that it's better for any significant market than even legacy money transfer methods, let alone trying to compete with newer tech.
I've used it for that. People use it on darknet markets for value transfer. I have seen many people claim to use it in Venezuela, though I can't confirm that (one of them posted in this thread [1]).
> Bitcoin's total TPS is circa 2-3. [1] And presumably a small fraction of that is actual money transfer. In contrast, M-Pesa, a digital money system that started about the same time and has millions of users, has 100x that volume and is growing rapidly. [2]
That's no longer true. The lightning network increases that to effectively infinite TPS. The infrastructure of nodes isn't that great yet, but it is now possible in principle for Bitcoin to scale to an essentially arbitrary throughput.
> So I'm entirely skeptical that it's better for any significant market than even legacy money transfer methods, let alone trying to compete with newer tech.
That's a fair skepticism. Though not due to slowness/throughput, as that problem is solved. And not due to environmental concerns, because that problem will be solved (in Ethereum, not Bitcoin). The legitimate objections to cryptos I see are:
1. It's not clear that decentralization, uncensorability, and irrevocability are really properties that people need. provides a value anyone really need.
2. Deflationary assets are subject to boom/bust cycles that can be toxic to modern economies. Crypto assets tend to be deflationary, and as such may not, over the longer term, serve effectively as global currencies.
I think those two points are the core of any serious objection to crypto. I believe that in the case of #1, the architectural change it would induce in our financial system is worthwhile, and consumers will feel the effects of that rather than the benefits currently stated for crypto. As for #2, it's a legitimate concern, and it may ultimately make them untenable, but we'll just have to see.
I appreciate your willingness to at least contemplate that Bitcoin might have flaws, which is better than most Bitcoin advocates.
But you share one of the habits that makes these discussions so frustrating. You substitute marginal examples and handwaves at the future when asked for clear present evidence.
I am saying that based on the evidence I find, despite 10 years of enormous free advertising, approximately nobody uses it today for money transfer when compared with other money transfer options. Do you have clear evidence otherwise? Not anecdote, not what it possibly does, but actual evidence?
> You substitute marginal examples and handwaves at the future when asked for clear present evidence.
Such is unfortunately the nature of all predictive discussion. I don't think i'm being any more speculative than anyone discussing say, autonomous cars, or similarly 'somewhere on the horizon' technologies.
There's a decent bit going on in that link, but point by point:
> 1. it doesn’t work. the software is absolute dogshit. buggy as hell.
This is just saying the current iteration is buggy. That's no counter-argument to the concept.
> 1.5. it can’t work. the mesh network problem
The difficulty of this problem depends on the number of relevant nodes, and the way you structure the network itself. He even cites a good example - BGP. He claims that BGP works because the nodes trust each other, but regardless of them trusting each other, they solve the mesh network problem. That trust is not integral to the solving of the mesh network problem.
> 2. the whole idea is dumb. nobody wants a network of prepaid channels.
Now this sounds like a decent argument. Except that, one could argue that your bank account and credit card are simply prepaid channels. If the LN gets up to scale, and if it achieves sufficient node liquidity that you can pay essentially anyone...then I don't see how this prepaid channel differs in any way from a traditional bank account.
> 3. the LN solves a problem that doesn’t exist. the idea is to make transactions fast again
The LN may or may not cause merchants to adopt Bitcoin for payments. But it definitely solves the more narrow "Bitcoin doesn't scale" problem.
> 4. the LN is coin-agnostic - so it isn’t an excuse for bitcoin’s unscalability
This doesn't even logically follow. It's just a complete non-sequitur. The LN is an excuse for Bitcoins not scaling yet. The LN can also be used to scale other coins. It may be that people prefer those other coins once they've achieved scale.
> Do you have clear evidence otherwise? Not anecdote, not what it possibly does, but actual evidence?
It's extremely hard to get data for something like that. But the clearest cut case is darknet markets. Cryptocurrencies are definitely actually used there for real commerce.
That is not at all the nature of all predictive discussion. Handwaves suit for a seed round, for example. But when you're looking for an A or a B round, you need significant evidence for your forward-looking statements. Bitcoin is years past the point where it deserves to get away with handwaves.
Also, "people use cryptocurrency for value transfer" is not a forward-looking statement. It's a statement of what people do now. And this comes out of you saying, "blockchains are useful now".
> That is not at all the nature of all predictive discussion. Handwaves suit for a seed round, for example. But when you're looking for an A or a B round, you need significant evidence for your forward-looking statements. Bitcoin is years past the point where it deserves to get away with handwaves.
You're handwaving right now. You can't know which part of the distribution you're in until it's over. I've provided quite a bit of evidence, as well. There are some forward looking statements for which there is no hard evidence, but only because there cannot yet be any.
> Also, "people use cryptocurrency for value transfer" is not a forward-looking statement. It's a statement of what people do now. And this comes out of you saying, "blockchains are useful now".
I am definitely not handwaving. I'm saying that the normal evidentiary standards for business evaluation should apply to Bitcoin. It's no longer novel, so the novelty exemption doesn't apply.
> They do use it for value transfer right now.
Money launderers do. KGB agents do. A variety of other criminals do. But I have yet to see evidence that a significant portion of ordinary people use it for value transfer in preference to either traditional means or modern, non-blockchain digital ones.
So yes, you are technically correct on a narrow interpretation of a single sentence. But you are so far wrong in terms of the meaning of that sentence in the broader discussion. For the purposes of evaluating Bitcoin's commercial utility, effectively nobody uses it. If you have data otherwise, let's see it.
The same applies for comparisons with the early Internet. Pre-web, lots of non-technical people used it for practical purposes because it provided superior utility over other options. That doesn't appear to be true for money transfer for Bitcoin. Even prominent Bitcoin advocates have given up on that. E.g.: http://avc.com/2017/08/store-of-value-vs-payment-system/
It's useful for cross-country transfers of money, and in-country if the alternative would be very annoying (or you just happen to have some cryptocurrency around and not regular money). I do use it for that and I've found it useful. The biggest downside in my experience has not been all the abstract figures and numbers and stories floating around, but the exchanges. Turning cryptocurrencies back into regular money is very annoying and the US ones are even very shady (locking your money in, etc). It's what's keeping it inside of the fringes for me.
> People use cryptocurrency too. For value transfer, and to a more limited extent, for dapps like Augur.
Soooo, buying drugs and illegal gambling? Sure, I'll give you that one.
My argument rephrased: "Because cryptocurrency investors have repeatedly made claims that don't pan out, we can be reasonably skeptical and concerned about their energy consumption until they actually fix it or at the very least provide peer-reviewed scientific analysis on how it will be fixed."
> Soooo, buying drugs and illegal gambling? Sure, I'll give you that one.
Yes, although also remittance payments, and some usage in places with unstable currencies like Venezuela. Hard to gauge how much, though.
> My argument rephrased: "Because cryptocurrency investors have repeatedly made claims that don't pan out, we can be reasonably skeptical and concerned about their energy consumption until they actually fix it or at the very least provide peer-reviewed scientific analysis on how it will be fixed."
While that is, in the abstract, a fair argument I don't think there are actually that many examples of it in practice. Vitalik didn't claim Ethereum would be a world computer right away. He's always been clear and explicit about the scaling roadmap. I don't think the promises of the core devs of Ethereum or Bitcoin have been overstated or unmet. If you believe otherwise though, i'd be happy to listen to your argument.
Bitcoin is a solution to unstable currencies in the same way that gasoline is a fire extinguisher. People in Venezuela that want to actually eat are using USD.
they cannot send or receive usd from abroad. they can do it with bitcoin. you get now the value proposition of a global currency that is not government controlled?
If crypto, being "not controlled by a central authority", solves inflation, surely it would already have replaced the default currency in Venezuela by now?
"Authorities have .. permitted trading of bitcoin in Venezuela, though they have heavily fined and detained people who use computers to earn bitcoins by auditing online cryptocurrency transactions. Such “mining” operations use immense amounts of electricity, which is heavily subsidised in Venezuela — meaning the state essentially winds up paying for the process."
"few businesses openly advertise that they accept cryptocurrency out of concern they will be extorted. It’s still difficult to make many purchases in Venezuela with bitcoin"
They have a national registry that you need to subscribe to if you are a miner. That and you also need to keep in handy your customs paperwork to prove that you paid entry duties for the equipment. Otherwise you open yourself to police extortion.
People in Venezuela certainly do send and receive USD from abroad, it is obviously the only way it gets into the country. You can go to a grocery store and buy food with USD. This is what people are actually doing. I suppose you can try to convince the people at your local grocery store to accept cryptocurrencies but good luck with that. And good luck using cryptocurrencies in a country that suffers from frequent blackouts of both electricity and internet.
I'm sorry but I currently live in Venezuela and what you are saying is wrong. Very few places in Caracas or hotels will actually take USD for payment since it is considered illegal unless you go through the regular channels with the idiotic govt exchange rate.
Bitcoin not only thrives here and allows you to bypass the whole craziness with the economy by using exchanges like localbitcoins.com where somebody would deposit the amount of bitcoin you sold to your local bank account. This way you just keep your money in bitcoins if you want. This is specially true with miners.
for sure people that live in Europe cannot deposit good amounts of USD to send through the bank to their relatives there. I know this for a fact. I think you are misinformed.
aris is technically correct. They are not legally allowed to bring a ton of USD into the country (if they're even well enough off to do so). And legally, they have to do so at government-mandated exchange rates (which no one does, because everyone buys/sells on the black market). Surely people are using USD where possible. But likely, they're HODLing their USDs (against the rapidly inflating Bolivares) wherever possible, too.
Meanwhile, no doubt some are using crypto to supplement their incomes/savings as well.
For most Venezuelans, getting access to cash is not a practical reality, even if it's a theoretical one. I went to Venezuela in 2011 and you couldn't even bring $1K USD worth of goods into the country without being taxed to death on it (or paying off some government official). How about cash? Also, I'd rather carry a USB stick with a private key on it than a wad of cash in one of the world's most violent countries (in the middle of an economic depression).
Well the thing is that cash is nowhere to be found so you just go around with your debit card and you are fine.
The other part is that we Venezuelans never walk anywhere. Going somewhere without a car feels dangerous. Oh and in big cities, if the car is armored the better. Plenty of shops now to convert your SUVs.
But can't i do the same thing from wherever i am and have it delivered? Or have it mailed as a gift? Even with the situation in Venezuela, Fedex/DHL still ship there.
Furthermore how does that allow you to pay for food, water, utilities, or even fuel for your car?
Do what? Order things with paper money or are you talking about some VISA/MC-backed debit/credit card? Where do you sign up for a USD-based bank account in Venezuela? How do you pass KYC checks? You got a family member or friend who lives in the States you can trust to escrow that for you?
Shipping Fedex/DHL in Venezuela isn't nearly as reliable as shipping in the United States. Nor is it cheap.
Energy and gas are super cheap in Venezuela (38 cents a gallon). I'm not sure where you're going with your argument there.
You can hold crypto as a hedge against the Bolivares, convert to fiat as needed, just like any other fungible asset.
Let’s say I am in Venenzuela and I have some bitcoin. Now what do I do with it? Can I pay my rent with it? Buy food? Of course not. It isn’t solving any problem a USD account isn’t solving. Converting Bitcoin into anything actually usable is the problem.
You can use localbitcoins.com or localethereum.com and somebody will buy your cripto and give you bolivares in your local bank account. That way you save a trip to the US to open an account, which most people can't afford anyway
Yet Vitalik also noted that Ethereum is not yet production ready. The roadmap is clear from the start. Proof of Stake and Sharding is in the plans. PoS has release version 0.1. Imo, the most significant work so far is proving that Smart Contracts do work, people are abusing it, but nevertheless, it works as designed.
> He also said Ethereum's "code is law", until he changed his mind and forked the network due to a hack.
It is ultimately a decision of the miners. They have the power to choose to upgrade or not. As for the decision to fork, it was done via voting. The decision was for the interest of the Ethereum project's success. Being a maximalist and losing sight of the goals is not desirable. But as a miner, you have the choice to not upgrade the Ethereum client you are using. And those who did not now became 'Etherem Classic'. Sure everyone should be a skeptic and hold accountable, but not to the degree of being unreasonable. One should understand why they desired to fork before making conclusions.
The decision is mostly in the users, i.e. those actually transacting with the currency. It is up to them which set of rules they wish to use when determining if a transaction has been fufilled. Miners are necessary and have some power to disrupt a smaller fork, but they only profit if they are on a chain which people are actually participating in.
I would definitely argue that blockchain is closer to the arpanet days than it is to the world wide web days.
This stuff is so early. A lot of the really enabling infrastructure doesn't exist, and won't exist for years. Most builders have no idea what the true strengths and limitations are. It'll get there, but it's not a 2020 type of get there. Maybe 2025.
What? That makes no sense. What infrastructure? What strengths? All you're doing is solving hash puzzles because some people arbitrarily decided that solved hash puzzles have value.
You can tell the ordering of transactions in the absence of a trusted third party. There's an entire body of research dedicated to ordering transactions called Byzantine fault tolerance, but all of them require trusted parties to maintain consensus.
Cryptocurrency is the first time we could really escape that.
As for infrastructure, things like the lightning network will provide scalability, things like starks and bulletproofs can help both privacy and scalability, decentralized exchanges help accessibility.
> That really depends on where you put 'beginning'.
It does not. In 1995 the Internet was useful for 30m people. In 1985 it was useful for 30,000. Email was better than paper mail from the get-go. Networked file transfer was way better than mailing magtapes or CDs. Remote terminal connections were way better than driving or doing long-distance dialup. The Internet was not the wonder it is today, but from very early on it had clear practical use.
> But more to the point, blockchains are useful now, just like the internet was.
Not really. I ask regularly here, and so far there's approximately no commercial use case where blockchains are better than some other technology. The main exceptions being hype, fraud, speculation, and some light financial crime like money laundering and capital control evasion. If you have some examples, I'll of course read them with interest.
My personal bet is that blockchains will be like XML: a technology that was going to be The FUTURE for a while, got put into a bunch of things (often generating large consulting revenues), and then quietly dropped later as people discovered that there were better alternatives for almost every practical use case.
There are many widely used data formats, such as OpenDocument files, that are XML underneath, often packaged up as .zip files. Much engineering data, such as KiCAD printed circuit board layout info, is in XML. COLLADA, for 3D animation and robotics, is XML. Open Street Map is XML. If you need to represent a large, complex tree-structured data object portably, XML is still usually the way to go.
I agree that it's a decent approach for that extremely narrow use case.
My point is the extent to which that is different from the peak of XML's hype cycle, which was circa 2000. Then, XML was everywhere. E.g., eBay circa 2004 would render data internally as XML, which would get passed off to multiple Rube Goldbergian XSLT transformation layers on its way to becoming HTML. Or I did some work at a bank around then, and their internal architecture was very XML-heavy. There was no good reason for this, and from what I see JSON now dominates.
I note though that your examples were all created when XML's hype cycle was in full swing, and many have enterprise roots. I'll be interested to see if projects created today end up using XML even for the document-creation cases for which it was intended. JSON is also a way to represent large tree-structured data, and I wouldn't be shocked to see it take over most of the data sharing just because that's what everybody knows.
JSON tools tend not to scale. See [1] A 1MB JSON file will blow up some tools. Engineering models of real-world objects are much larger than that. There's sort of an assumption with JSON that you'll read it into a JSON tree and work on that, not process it sequentially.
> It does not. In 1995 the Internet was useful for 30m people. In 1985 it was useful for 30,000. Email was better than paper mail from the get-go.
You see that now. But in 1985 most people thought email was silly, if they knew about it at all. Why replace the mail? The mail is fine. It's only when you look back on it, with modern eyes, that you see how great it was.
> Not really. I ask regularly here, and so far there's approximately no commercial use case where blockchains are better than some other technology. The main exceptions being hype, fraud, speculation, and some light financial crime like money laundering and capital control evasion. If you have some examples, I'll of course read them with interest.
I stated some above. But i'll copy/paste:
- Value transfer
- Prediction markets
- Asset trading/custody (not just cryptoassets, I mean, potentially real estate, equities, etc. can be tokenized)
- Venture capital that is more transparent and open (the ICO space is obviously not there yet, but I think it can move in that direction)
Now, you may counter that existing institutions do these things just fine. But blockchains do them in a different way, with different properties. Just like email did the same thing as mail, in a different way, with different properties. For instance, decentralized exchanges exist - exchanges that don't require you to provide custody of your assets to the exchange. That is a true revolution, and it doesn't just have to be for crypto tokens. Those tokens can represent real life goods, property, etc. You can tokenize anything, in principle.
Having lived through 1985, most people did not think email was silly. Even we primitives of that dark age could tell that instant delivery was generally better than waiting a few days.
Moreover, the "most people" standard does not apply. I'm not asking what "most people" think about Bitcoin. I'm asking for evidence of delivered value to early-adopter audiences. In 1985 any crowd of tech people could tell you why email was better. It would have been easy to find non-technical academic staff who were excited about email, as many of them had been using (mostly non-Internet) email for years at that point. Neutral observers could easily be shown that it was valuable.
> I stated some above. But i'll copy/paste:
No, what you stated above was hypothetical. None of those are areas where blockchains are demonstrated to be better than commercial alternatives for any significant audience.
Ten years ago, even five years ago, I would have given you a pass for selling the amazing possibility rather than any actual facts. Sorry, but time's up on that. I'm asking for proof of traction, not further hype.
I believe the most common reason some people don't see the utility of cryptocurrency is that they have a real or perceived vested interest in the status quo around money not being disturbed.
It is often the case that:
Securities lawyers and traditional venture capitalists don't want a world where regulatory agencies and traditional venture capital can be routed around.
Those in financial law enforcement don't want the trend toward total financial surveillence, euphemistically called instituting anti-money-laundering controls, reversed.
More generally, those with a major economic or ideological investment in government-funded programs don't want people to have financial privacy that makes enforcement of the income tax more difficult, or to see an alternative to central bank issued currency, which gives governments the power of seignoriage, gain traction.
The utility of cryptocurrency is clear: sending value from point A to point B electronically without depending on an intermediary that can extract rent or surveil/censor the transaction.
The problem with this line of thinking is that the people most strongly interested in keeping financial transactions away from the prying eyes of government are criminals. Criminality is strongly correlated with negative-sum interactions with society, and that tends to provoke a response.
So if the best cryptocurrency early-adopter audience is people who are harming society, then you've pretty much guaranteed that cryptocurrencies will remain societally marginal.
That's a different debate. My point is that there is real utility in cryptocurrency. The denial of that utility of motivated not by a sincere belief that the utility is not there, but by an aversion to what that utility enables.
No, I'm denying that facilitating crime is generally "real utility".
In the case where criminals profit from harm, the criminals may personally experience utility from Bitcoin, but the total net utility is negative. E.g., if I steal your new $30k car and sell it to a fence for $10k paid in Bitcoin, I have experienced a $10k gain. But since you experienced a $30k loss, net utility is negative. Ransomware, often seen using Bitcoin, is another example of net negative utility.
In the case where the exchange in question is low harm, we generally see society evolving toward legality. E.g., marijuana has been declining in illegality, so the need for evading state detection declines too. There are now multiple marijuana storefronts within walking distance of my house. Bitcoin doesn't help them.
I suppose you could say I have an investment in government, which I call "being part of a modern, civilized community". So I do object to Bitcoin's money-laundering potential on those grounds, and also deny that aiding freeloaders in tax evasion is much in the way of "real utility", any more than any other tax evasion scheme.
Even if we're willing to call Bitcoin's financial crime usage "real utility", I don't think it's "real" for the purposes of this discussion, which is about comparison with the early days of the Internet. The comparison is only meaningful if the early "real utility" is indicative of future utility for a broader audience. That was obviously the case for something like email (which 90% of Americans now use) or online shopping (80%). But there's no particular reason to think 80-90% of people will be excited about risking IRS penalties and jail time for tax evasion or money laundering.
>>In the case where criminals profit from harm, the criminals may personally experience utility from Bitcoin, but the total net utility is negative.
In the context that you made the argument in, which is consumer demand for cryptocurrency, the type of utility we're talking about is utility for the user.
>>In the case where the exchange in question is low harm, we generally see society evolving toward legality. E.g., marijuana has been declining in illegality, so the need for evading state detection declines too. There are now multiple marijuana storefronts within walking distance of my house. Bitcoin doesn't help them.
Marijauna stores would benefit tremendously from a widely used cryptocurrency. Legal marijuana shops have enormous difficulty getting bank accounts.
The government pressured payment intermediaries into stopping donations to Wikileaks a few years ago. Cryptocurrency was a vital lifeline for the organization during the blockade.
Craigslists recently shut down its personals section, due to FOSTA. Adult entertainers are having their PayPal and Patreon accounts closed. Venezuela's economy has been totally destroyed by its government's interventions. Areas of China are being turned into an Orwellian dystopia: https://www.hrw.org/news/2018/02/26/china-big-data-fuels-cra...
Your claim that ways of circumventing centralized control of financial transactions is growing unnecessary is totally unfounded.
>>I suppose you could say I have an investment in government, which I call "being part of a modern, civilized community".
So to clarify, you're not part of any of the groups I mentioned earlier?
>>But there's no particular reason to think 80-90% of people will be excited about risking IRS penalties and jail time for tax evasion or money laundering.
Filesharing is used by millions of people, and it is illegal. There are many countries in which taxes are widely avoided, so we also know that happens. In some countries circumventing govermment control is a matter of survival.
Cash, by its very nature of being fungible and untrackable, makes anti money laundering laws almost useless, and cash is used the world over.
Your idea of a global surveillance state to enforce taxes on private transactions and to track criminals as the only way to coordinate the use of resources and prevent crime is not the only future open to mankind, and you yourself obviously don't believe it is or else you wouldn't put so much effort in trying to discourage the use of cryptocurrency.
We could go to a future where law enforcement needs a warrant to know the content of a transaction, and where taxes are levied on immovable property, instead of being tied to private economic activity, and a strong civil liberties and economic argument could be made that this would have total net utility.
And it's not just circumventing centralized control by governments. Private financial intermediaries track their users' financial activity extensively.
On top of all of this, simply having a mechanism to transfer value electronically through an immutable protocol provides utility in avoiding rent-seeking by large trusted third party intermediaries who've attained large network effects.
The idea that there is no conceivable utility in avoiding payment intermediaries that can censor/surveil you, except to commit crime, let alone crime that is socially harmful, is preposterous.
I'm not putting much energy into discouraging the use of cryptocurrency. The main energy I'm putting in is to pointing out that approximately nobody uses it as a currency. The Bitcoin emperor may not be entirely unclothed, but it's at best a shopworn thong.
I agree some governments do bad things and would also like less of that. I just don't think Bitcoin solves any of those problems. China may indeed be turning into a digital surveillance state, but that makes digital currencies like Bitcoin ineffective given that they depend on a free and open internet.
I also agree that some countries are only haphazardly governed, with tax evasion as common. But I don't think there are many countries like that that a) don't have perfectly good ways already to evade taxes, b) have reliable electrical grids and internet grids, and c) have sufficient economic activity to make them trendsetters for the global economy. Is Bitcoin used beyond the level of anecdote in Venezuela? Possibly. Will that matter to the adoption of Bitcoin in most of the world? No.
I'm definitely not saying that there's no conceivable utility in cryptocurrencies. I'm saying that there's approximately no practical, demonstrated utility aside from some light financial and commercial crime. My main problem with the Bitcoin promoters is that the only thing they have is theoretical, imagined, conceptual utility. Selling the dream was fine 10 years ago. But at this point the reality is pretty clear.
>>I agree some governments do bad things and would also like less of that. I just don't think Bitcoin solves any of those problems. China may indeed be turning into a digital surveillance state, but that makes digital currencies like Bitcoin ineffective given that they depend on a free and open internet.
China can't stop people in its borders from using cryptocurrency. Neither can Venezuela, where it is currently helping at least some people survive. Electronically transmittable information is just too hard to contain, even without an open internet.
With the greater utility that comes from a larger userbase and greater liquidity, and technological upgrades like better scalability, it's easy to imagine cryptocurrency helping a lot of people, who are currently repressed by major institutions like governments, protect and increase their wealth, leading to a free-er and more prosperous world.
>>My main problem with the Bitcoin promoters is that the only thing they have is theoretical, imagined, conceptual utility.
There are other, better cryptocurrencies than Bitcoin. But I do agree that much of the utility of cryptocurrency is imagined and theoretical.
>>Selling the dream was fine 10 years ago. But at this point the reality is pretty clear.
Cryptocurrency was a totally new paradigm when Bitcoin launched 9 years ago. It needs more time to be developed and tested before a verdict can be passed about the technology's inherent utility.
Prediction markets work just fine already, thanks. The blockchain equivalents are a terrible use of the technology, since they need to use external sources to get the results of markets. This means either trusting a centralized service (and so negating all of the advantages of a blockchain) or some complicated web of voting for the results (open to manipulation and over-the-top complexity)
Meanwhile, existing systems like Betfair's betting exchange have been working for over a decade.
My personal bet is that blockchains will be like XML: a technology that was going to be The FUTURE for a while, got put into a bunch of things...
That's an outstanding analogy, one I had not considered before, but certainly XML is far less..err...includable is perhaps the word(?)... into a software project then a blockchain-based datastore and verification would be, right?
Let's just hope a XSLT-like companion to the blockchain is never developed...
Intresting! They strike me as equally includable. It's easy enough to do XML-based persistence, or XML-based messaging between nodes of a distributed system.
Indeed, Jabber, an XML-based protocol, is seeing new life as a big IOT protocol. My cheap robot vacuum spends its day hanging out in a chatroom and communicating via XML, for example.
You should look into projects like Golem (https://golem.network/home/), it allows people to use the blockchain to perform complex calculations such as 3d rendering or training machine learning models.
This is a great use case for the blockchain but you may have missed it if you only read Techcrunch articles about CryptoKitties.
> But more to the point, blockchains are useful now, just like the internet was. They're just not useful for all the things that are being promised (yet)
How long do we have to wait to find a valid use case for blockchains? It's been 10 years now and we're still asking the same question.
The main use case for block chains is quite obviously to skirt government regulation: black markets, unregulated securities and quasi-securities, etc. A secondary and related use case is to avoid the hassle and complexity of old fashioned equity and other fund raising constructs and to make easier international wire transfers.
Putting ethical concerns aside: these are very large market segments. Cryptocurrencies may be overvalued but there's definitely a real use case. It's just not a use case that governments, banks, or conventional VCs like.
I feel like all the claims to the effect that cryptocurrencies have no use case are ignoring the obvious.
Also, don't forget countries with draconian currency controls, like Venezuela, produce demand for money transfers even if difficult and expensive.
And I think the hidden story of the "war against terrorism" has probably been a sustained effort to crack down on informal money transfers, and something like cryptocurrency is an inevitable response to the decline of traditional methods.
We're probably entering an era when enforcement of these kinds of laws will be either impossible or will require draconian surveillance and extreme penalties. Anything short of "iron fist" enforcement will be skirted easily using cryptography, darknets, etc.
I've definitely transferred assets to someone anonymously (not for anything illicit, it was strictly a non quid-pro-quo charitable act) using Bitcoin. I did not want this person to know who I was because I didn't want them to feel like they owed me anything.
I have no data on it and it depended on both me and the other person being Bitcoin enthusiasts... It was way more convenient to find the person's btc address than their physical address.
> How long do we have to wait to find a valid use case for blockchains? It's been 10 years now and we're still asking the same question.
Here are some use cases that I think are potentially legit:
- Value transfer
- Prediction markets
- Asset trading/custody (not just cryptoassets, I mean, potentially real estate, equities, etc. can be tokenized)
- Venture capital that is more transparent and open (the ICO space is obviously not there yet, but I think it can move in that direction)
No, for most things what you really need is a happens before relationship. Git does that better, since it supports multiple timelines (branches) that can be resolved (merged) cleanly if there are no conflicts (double spends).
all of this makes sense to be but what happens when someone hacks your grandmas cellphone then they own her house title and she cant open the front door?
I guess you could have a 3rd party that has to verify everything ( government ) but then you are basically back to just doing it with a paper deed at the courthouse.
These are open questions. And it may be that blockchain will be an underlying infrastructure that is mostly used by large, centralized entities to settle between each other. But if that's the equilibrium into which we settle, individuals will still have the option to control their own assets in a true sense, even if most people choose not to.
The question is why would large, centralised entities use a blockchain to settle between each other? Large, centralised entities generally can and do trust each other to the extent required, so won't ever need a blockchain because they can use a more efficient system...
It may unfortunately be path-dependent, and the large entities that exist now will not choose to convert. However, if you imagine a parallel universe in which blockchain was invented before large institutions formed, then those institutions may have formed around Blockchains, because then they wouldn't have to trust each other.
Right now, getting into the 'trusted financial institution' list is extremely difficult. It's a slow, incremental process that takes decades of good behavior and careful stewardship. Part of the reason it's so difficult and so heavily regulated is because of how much trust we place in these institutions. If we did not have to trust them so much, it would be easier to become one. It would have less need for regulation. Incumbents would be weaker, and the industry as a whole would therefore be healthier. This is sort of an abstract point, but I think it's the truest sense in which blockchain may change the world: by commoditizing trust.
it would be really cool to be able to verify the ownership of any property on earth by checking Bitcoin or Eth block chain, but there would have to be a way to have authority unanimously change the record.
by signing with a keypair you could prove to anyone online you owned something. to list a house or get a loan or mortgage you could use this.
a really neat case for this would be lost items. if each cellphone had its IMEI and your keypair associated you could prove you owned something lost. or if found someone could look you up to return it. you could buy a game or software once and never have to worry about a serial key.
Perhaps a solution to that might be to give the government the authority to relabel a token. That is, every property is represented by a unique transferable token. However, the ledger that says which token represents which property is maintained by the government, centrally. Under ordinary circumstances, this ledger is not consulted/used but when say, someone has their property seized by a court, it might be.
Transcript of text exchange with my sister just yesterday:
SISTER: Any interest in learning blockchain development? I'm getting into that world and will need someone reliable. Plus, I'll be able to expose you to projects and get you consulting gigs. I know you have your new job and all it's demands. Timing prob isn't good but figured I'd check in anyway.
ME: No thanks. I know the blockchain technologically is a thing but every application of it I've read about (e.g cryptocurrencies) looks like a scam perpetrated by people who think the problem with society is being social, misunderstand the history and purpose of the Federal Reserve system, and/or believe the idle rich deserve to be richer. I understand there's a lot of stupid money washing around in those circles. Just make sure you're playing with somebody else's money.
SISTER: I have no interest in the ICO crypto currency application. I'm more into the smart contracts. Id like to apply it to healthcare (help end the opioid crisis). Or the credit reporting agencies...get rid of them and allow individuals to control access to and use of that information. So many applications that are just beginning to scratch the surface. My MBA thesis project is using blockchain to help end the opioid epidemic through better diagnosis of individuals more prone to addiction or just getting it to sell on the streets.
ME: I've seen some discussions of using blockchains for things like certifications or logistics. They've all seemed kinda hand-wavey to me. Like yes there may be some minor efficiencies to be gained by moving to a new tracking/trust system. But the real issues will still be the humans at the ends of the transactions. I'm not sure how the blockchain fixes that. But maybe you can persuade me. Fortunately, the technology itself is over my head. I've seen some python tutorials I could probably dig up for you. But I don't have time myself to try to pick it up.
SISTER: The ledger platform we are currently planning to use (hyperledger by IBM) has some free training but apparently you need a basic understanding so I'm sure it will be way over my head.
ME: I hate to be cynical (j/k I love it) but I'm sure that's the point. IBM would love to convince the next generation of MBAs they need Hype(r)ledger™ and its attendant battalion of IBM consultants to reimplement a table or two that someone in the org already has working like a charm in a simple spreadsheet.
SISTER: Well duh...they're for profit public businesses. I would be worried if that wasn't their reason. That doesn't mean that the applications hosted on their platform aren't practical or solve a problem that prior technology couldn't. 90 people die every day from opioid overdoses ... what if your technology could reduce that number to even 80? Profits are secondary. Check out blockmedx.com when you have a second.
> Patients can securely share access to their prescription records with interested parties and be compensated with MDX.
So patients are encouraged to sell their prescription records to "interested parties" in exchange for chits they can use to buy prescription drugs. Sounds altruistic to me!
10 years in and still nothing to show but vague promises about "things" being worked on. Ideas men all around and some fools are still giving away money for those ideas that will never see the light of day.
I think that the EVM hasn't found its great use yet. But Cryptocurrencies in general are being used widely for international currency movements and as currency in distressed countries like Venezuela where the 'black market' is just the regular market due to government instability.
The Venezuelan bolívar is not a good example of prime markets for cryptocurrencies. The forced exchange rates, runaway inflation, and general mismanagement has created a black market in which literally any other currency is better.
I think it is a good example because cryptocurrencies solve the confidence issue people have in the local currency and takes away control of a single government to impose controls and depreciate the currency. You also get to bypass the notoriously bad banking system and since bank transfers cannot be reversed here, it's actually safer to trade bitcoins to bolivares than it is to trade bitcoin to USD using Zelle or PayPal.
Again, any currency solves the confidence issue, even gift cards, not just cryptocurrencies. There's an entire black market exchange with other currencies already in place.
How would you send fiat to a family member stuck in Venezuela ? I agree that the value of cryptocurrency is hugely inflated, but it's not zero either. It's a good fit in some scenarios.
You could (and people do) send gift cards, or pre-paid debit cards. These have the added benefit of being accepted in stores, etc, whereas cryptocurrencies... not really?
Anything of value sent via snail mail gets seized. CC and bank accounts denominated in USD can't be used.
There is a black market where people pay with physical USD and crypto.
A Bombe is really, really not a computer. It has more in common with a clock, it's a fantastically complicated machine, but a computer it is not. Check out a video of them being used and it's more obvious.
Colossus was a computer, although it's very unlike anything today because it isn't a stored programme computer. So it's more like one of those LCD watch games from the 1980s, it could do something else than what it's doing now, but only by literally taking it to pieces and rewiring it.
But your main point is spot on. In the mid 1940s several machines including Colossus are built mostly by military groups and these fulfill different criteria for bring a "computer" as we'd understand it. But by 1950 companies are already selling these new "computers" for commercial use. The US Federal Government bought several in 1951.
> They're just not useful for all the things that are being promised (yet). Also, just like the internet wasn't.
Exactly. The early internet was full of promises of taking over retail. None of that worked, at first. Instead the internet was useful for messaging and putting up personal websites. All the responsible people at the time kept whining -- how is it going to make money??
Well, people kept working on it. For years. Business cycles came and went. Eventually the promise worked out.
> Exactly. The early internet was full of promises of taking over retail. None of that worked, at first. Instead the internet was useful for messaging and putting up personal websites. All the responsible people at the time kept whining -- how is it going to make money??
What? This is nonsense alternate history.
The early Internet had active, useful messaging long before anyone thought it would be useful for "retail". The arrival of commercial spam on Usenet was a shock to everyone. And personal websites came before the dot-com craze.
> The early internet was full of promises of taking over retail. None of that worked, at first.
Timeframe? The early Internet was pretty non-commercial and the commercial services were generally proprietary and/or run by telecoms (Minitel, Prestel). There were a lot of failures in the 99/00 boom, but Amazon was founded in 1994.
> how is it going to make money
Ironically the question was more "how am I going to give you my credit card safely, given that cryptography is a technology subject to US export control".
The Internet was useful for a lot more things than messaging (without belittling its immense importance) and putting up "personal" websites. It allowed for efficient file transfer and retrieval of information across all distances, facilitating all sort of research and collaboration in the process. It nearly instantly provided a lever to all science and technology.
Online shopping was not a "promise" on which the Internet and its predecessors were built, it was merely one of an uncountable amount of use cases on top of an already useful thing.
In the early days, there were always way more users that wanted to get on the Internet at more times than possible. The scale of the Internet was never capped by interest or potential applications, but by available funding and technology. To me, that sounds like the opposite of cryptocurrency.
DAPP Radar is not the authoritative source for all Ethereum applications. There are many like Augur, Golem, MakerDAI, etc that aren't even included on that list.
Depends on when "early days of internet" is defined? The internet could be seen as an evolution of ARPAnet https://en.wikipedia.org/wiki/ARPANET which was defined in the mid-1960s and took years to deploy and probably decades to evolve to the usefulness you describe.
There is a lot of trust involved in a cryptocurrency transfer. You have to trust your technical competence to securely mount your wallet. You have to trust the wallet you're sending money to is the wallet it's supposed to go to. You have to trust the person you're sending money todo what you're paying them to. You have to trust the network to maintain the value and convertibility of the currency you're sending and receiving. Et cetera, et cetera
In practice, nobody wants to do these things. So we see centralization at exchanges. Precisely in the way people not wanting to handle cash use banks.
> There is a lot of trust involved in a cryptocurrency transfer. You have to trust your technical competence to have securely mounted your wallet. You have to trust the wallet you're sending money to is the wallet it's supposed to go to. You have to trust the person you're sending money to will do what you're paying them to do. You have to trust the network to maintain the value of the currency you're sending and receiving. Et cetera, et cetera
That's clearly not the point. The transfer itself does not require trust. That's the value.
Cash transfers and barters are trustless. Wires are trustless (in being reasonably irrevocable) in a manner similar to cryptocurrencies (i.e. if we ignore the plumbing). Cryptocurrencies solve for trust in the most reliable part of the trust chain while exacerbating every other element of transaction risk.
> Wires are trustless (in being reasonably irrevocable) in a manner similar to cryptocurrencies (i.e. if we ignore the plumbing).
Irrevocability is not the same as trustlessness. Your transaction is still being intermediated by an entity that can choose to appropriate your funds otherwise.
> Cryptocurrencies solve for trust in the most reliable part of the trust chain while exacerbating every other element of transaction risk.
I think I agree with this statement literally. The question is what price are we paying for that reliability? And does blockchain offer an alternative tradeoff that we might like better?
> Your transaction is still being intermediated by an entity that can choose to appropriate your funds otherwise
The frequency of each of coins being stolen from wallets, being lost by exchanges or pilfered by ICO frauds is far, far higher than anything happening at proper banks. Blockchains are a neat technology which should have never been marketed as a currency.
> The frequency of each of coins being stolen from wallets, being lost by exchanges or pilfered by ICO frauds is far, far higher than anything happening at proper banks.
What does that have to do with what we're talking about?
The statement you are defending was "Being able to transfer value between two parties without having to trust anyone has value." Compared to wire transfers, one is required to trust the intermediary in that case.
I think at that point it becomes fair to ask: what is the likelihood that I am going to lose money unexpectedly to my credit union, or my recipient to her bank? And then by comparison, what is the likelihood that I or my recipient are going to lose money to coin theft, exchange failures, fluctuation in valuation, or other things inherent to dealing with blockchain transfers?
Rightly or wrongly, I think many people would rate potential losses higher with blockchain solutions than with USD wire transfers. I know I would.
> Compared to wire transfers, one is required to trust the intermediary in that case.
You're totally right. But let me flip the question around a little bit. What would our financial system look like if we didn't have to place so much trust in our intermediaries?
It's not that banks aren't trustworthy. They are. They're extremely good stewards of the public trust, for the most part. But the fact that we place so much trust in them has systemic effects that are stifling to innovation. And I think that's what blockchains may allow us to overcome.
I hear what you're saying about banks stifling innovation. I think current blockchain alternatives highlight the tradeoffs, though.
I think risk is associated with stores of value. "I rob banks because that's where the money is." So we move the stores of value from banks to blockchain exchanges and hot wallets, and the risk moves accordingly. Now, instead of the risk being borne by organizations with decades or centuries of experience mitigating it, backed by the Fed, it's borne by people who barely understand the wallet software they downloaded, and Magic: The Gathering card traders who aren't as smart as they thought they were, and people who are absolutely definitely sure that smart contra--oops, let's just "fix" that.
So what you describe as centralized stores of trust stifling innovation can also be described as centralized stores of risk mitigating loss. And I think that's pretty much what we've seen so far.
I agree. Fundamentally, what we have here is the potential for an alternative model. It remains to be seen whether this model can evolve to be better - I absolutely agree that it is not better right now. I think that it has the potential to be though.
How exactly blockchains helps with that? It's open protocol which helps but most of the people interact with it through centralized points wallets providers, exchanges etc and we already see classic centralization. It seems to me similar as it is with Facebook which interacts with open protocols but is many people have to go through it and solutions seem to be legislatively rather than technological(although I hope projects like blockstack can help with this)
I think the main point is having an open protocol built on top of decentralized, trusted infrastructure. In that way, anyone can start a bank, and get to 'trust scale' immediately.
> What does that have to do with what we're talking about?
Generally speaking, if my things get stolen, "it was stolen by X and not Y" is not a value-adding rebuttal. It is actually counterproductive if X (e.g., a cryptocurrency thief) is harder to gain recourse against than Y (e.g. an FDIC-insured bank).
> Generally speaking, if my things get stolen, "it was stolen by X and not Y" is not a value-adding rebuttal. It is actually counterproductive if X (e.g., a cryptocurrency thief) is harder to gain recourse against than Y (e.g. an FDIC-insured bank).
That's certainly true. But the issues around people losing their coins and having their keys stolen can be solved by better UX and application security. Essentially crypto transmutes the problem domain, from a people problem to an application design problem. It's still a problem. It still needs to be solved, but the domain-transfer allows it to be solved cheaply at scale in a way that the human one can't be.
In other words, i'm making the claim that the issues you cited are not essential properties of blockchains, merely transient properties of their present implementations and UX. If you want to make the case that they are in fact central, i'd be happy to listen to that though.
"Essentially crypto transmutes the problem domain, from a people problem to an application design problem."
The fact that nobody understands how human institutions work is an advantage, because it prevents malicious actors from subverting them. Whenever someone figures out how institutions work, they destroy them and civilizations fall, so they evolve to be incomprehensible. So "transmuting the problem domain" seems like a bad move to me.
We may just have to agree to disagree here. I've never been a fan of security by obscurity, though obviously it does have some use cases. I think we have the opportunity to design secure systems that do not rely on the frailties and biases of human judgment, and I think it's worth exploring.
> If you want to make the case that they are in fact central
End financial services users repeatedly choose convenience and risk guarantees over self-management. This isn't something which can be papered over with a saucy UI, particularly when the tangible benefit is difficult to describe. ("Decentralization" isn't a benefit, it's an attribute.)
> End financial services users repeatedly choose convenience and risk guarantees over self-management. This isn't something which can be papered over with a saucy UI, particularly when the tangible benefit is difficult to describe. ("Decentralization" isn't a benefit, it's an attribute.)
Totally agree. In a hypothetical crypto dominated world, most people would still use centralized services to store their money. But they'd have the ability to opt out if and when they choose.
> In a hypothetical crypto dominated world, most people would still use centralized services to store their money. But they'd have the ability to opt out if and when they choose
The problem with this vision is those people using centralized services see no benefit. They are better off sticking with the status quo.
Cryptocurrencies make sense for people who wish, for philosophically reasons, to control their own money. That vision doesn't require a "crypto dominated world." It does, however, require shrinking the vision from "re-imaginging the financial system" to "solving a need for a small group of devoted people." That's okay, and if that's how crypto were marketed it would (a) be more honest but (b) come with a lower value.
It's not true that they see no benefit. They will see benefit in:
1) cheaper financial services
2) broader financial services
3) real-time financial services
4) access to financial services regardless of location (or nation)
5) decentralized applications fully integrated with financial services
The average Joe doesn't need to control their own private keys in order to gain these benefits.
But think of it this way. What would be more difficult, for an organization or company, today?
A) start your own bank
B) start your own key management service
A) make an application that accepts payments as low as $0.01
B) make an application that accepts payments as low as .001 ETH
A) create a new protocol layer on top of the banking system
B) create a new protocol layer on top of Ethereum
---
Today, we rely on perhaps at most a few dozen companies (PayPal, Stripe, VISA, MC, etc) to build interfaces with our banking system.
There is no "app store" for banking system financial services. It's hard, hard work to build anything on top of that archaic system.
Blockchain makes currency an internet-native construct. Which has profound implications that we are just beginning to see the very earliest examples of.
1. This was clearly true in the beggings now to so much. Scalability is hard issue which centralized solutions doesn't have.
Existing solutions also evolve and has become cheaper, faster and more accessible. Sure there are exceptions like political dissidents but that's relatively small group. If you would like to solve this issues on large scales like Venezuela than solutions would be mostly political rather than technical.
If a million people want to deal with each other without any trusted party to intermediate, then they have to keep a million ledgers and agree on a protocol for reconciliation. Once you've conceded over a million-fold factor of inefficiency, being cheaper doesn't seem plausibly within reach. I don't see the details as mattering much; it's the big picture that doesn't make sense.
> The problem with this vision is those people using centralized services see no benefit. They are better off sticking with the status quo.
Narrowly, yes, that's true. But I think there's a broader context to consider than that. Our current financial system is architected around these financial centers of gravity. Blockchains represent an alternative to that structure. Yes, there will still be intermediary institutions, but they will not have the same fundamental centrality that the current ones do. I think this is an important change, and one that is likely to lead to other changes that will be more directly appreciated by consumers and the broader economy than the philosophical self-sovereign money issues.
Irrevocability is not the same as trustlessness. Your transaction is still being intermediated by an entity that can choose to appropriate your funds otherwise.
Personally I trust those entities much more than some shlocky fly-by-night crypto exchange.
> You aren't trusting an exchange when you send a transaction on the blockchain.
This is true, but exchanges have become the de facto on/off ramp for cryptos. If I want to acquire bitcoin without mining, how am I going to do it other than buying from a centralized entity?
Edit: As I post this I remembered that Paradex, a decentralized exchange for ERC20 tokens built on 0x, was recently acquired by Coinbase[1], the largest centralized crypto exchange, who in turn might soon be acquired by Facebook[2]
> This is true, but exchanges have become the de facto on/off ramp for cryptos. If I want to acquire bitcoin without mining, how am I going to do it other than buying from a centralized entity?
Sure, that's true. But once you own them, they're yours to do with as you please. You can also buy them from someone peer to peer if you really want to onramp in a 'decentralized' way.
Only for the onramp. I know that you know that, too. Why are you arguing disingenuously? You have a reasonable case to make, you don't need to stoop to that.
> You can also buy them from someone peer to peer if you really want to onramp in a 'decentralized' way.
This makes it seem like you can onramp via an exchange and still maintain all the benefits of decentralization. If I don't onramp in a decentralized way then there will also be a centralized entity with tremendous power.
> The transfer itself does not require trust. That's the value.
Don't you need to trust nodes that they'll pass down and/or include process your transaction, and that they'll do so in a timely fashion? Which seems just like trusting that, say, your bank or the Mastercard servers will process your transaction properly? Not to mention the more mundane aspects like the fact that you still need to trust that your ISP won't cut off your access to the network, etc...
To me the value seems to be that nobody can forge a transaction based on your currency (or whatever it is you have), not the idea that you somehow don't need to trust anyone when you do transfer value.
That's true, but the degrees of freedom are different. The node processing your transaction cannot steal your money in crypto. It can only choose not to broadcast your transaction, and they are also in perfect competition with all the other nodes. Which means that if one node chooses not to process your tx, another will soon.
> That's true, but the degrees of freedom are different. The node processing your transaction cannot steal your money in crypto. It can only choose not to broadcast your transaction, and they are also in perfect competition with all the other nodes. Which means that if one node chooses not to process your tx, another will soon.
You're right, sort of, but I don't think those two things are really distinct capabilities. You trust your bank, because your bank could theoretically forge a transaction to themselves of all of your money. Or just tell you that your balance is zero and refuse to give it to you.
I don't really follow what you're saying now or how it related to the previous discussion to be honest. But to respond to what you currently said, I trust my bank because there's a chain of trust between us via the government and its relevant laws, not because of what the bank itself is or isn't physically capable of doing.
This is the last line to which you were referring, right?
> To me the value seems to be that nobody can forge a transaction based on your currency (or whatever it is you have), not the idea that you somehow don't need to trust anyone when you do transfer value.
What I meant is that the capability that "nobody can forge a transaction" and "don't need to trust anyone" are actually the same thing. You are forced to trust your bank because your bank could forge a transaction on your behalf. You trust them not to do this. That is the nature of your trust in them. Blockchain eliminates this weakness, and it is in that sense that you do not have to trust a 3rd party.
> What I meant is that the capability that "nobody can forge a transaction" and "don't need to trust anyone" are actually the same thing. You are forced to trust your bank because your bank could forge a transaction on your behalf. You trust them not to do this. That is the nature of your trust in them. Blockchain eliminates this weakness, and it is in that sense that you do not have to trust a 3rd party.
If this is really what you're saying, then you've completely changed your argument 180 degrees to match that of me and the above commenter (which is cool!), because earlier you said the exact opposite. Specifically, when the above commenter said "you have to trust the network to maintain the value", you rebutted that that "is clearly not the point. The transfer itself does not require trust. That is the value." Now that you've concluded that the actually is trustless storage rather than in trustless transfer, yes, I think we are in agreement!
Notwithstanding the above, by the way, it simply isn't true that "I am forced to trust my bank because they could forge a transaction on my behalf". It's actually the opposite... I don't trust my bank for precisely that reason. Rather, as I stated above, the reason I nevertheless end up ultimately trusting my bank is that I trust the government will have my back if the bank decides to screw me over illegally. Again: it has nothing to do with the bank's capabilities or lack thereof, and everything to do with the legal system.
I haven't changed my position at all. The transfer does not require trust. Both the transfer and the storage do not require trust.
> I don't trust my bank for precisely that reason
Yes you do, unless you don't have a bank account. The fact that you presumably have a bank account with a non-zero balance is evidence that you trust them not to steal your money.
> There is a lot of trust involved in a cryptocurrency transfer. You have to trust your technical competence to securely mount your wallet. You have to trust the wallet you're sending money to is the wallet it's supposed to go to. You have to trust the person you're sending money todo what you're paying them to. You have to trust the network to maintain the value and convertibility of the currency you're sending and receiving.
Good point. Although I would draw a different conclusion. Your point assumes this new technology is for direct human consumption. For me decentralisation, smart contracts and "the internet of money", along with AI, will allow autonomous agents operate and interact without human intervention. That will be transformative.
That's not really accurate though. Only in a perfect, unhackable world would you not have to trust anyone. People have their local wallets attacked and stolen through an incredibly diverse set of attacks, people fell for "mental wallet" concepts that were then easily stolen, and people have lost an enormous amount of value by trusting storage mechanisms and memory for passwords and wallets. Then on the flipside at least what, 80% of exchanges now have had compromises? Do you think this technology has really moved the bar forward around trust as a concept?
This is wrong. The trust is still centralized, but on the developers of the platform/crypto chain/smart contract, rather than on an institution. This has the incredible downside that if something goes wrong, I have no recourse.
> Being able to transfer value between two parties without having to trust anyone has value.
The value of a currency is based on nothing more than trust. It’s because people trust a (crypto)currency that it has a value; trust is the very thing that makes a dollar bill having more value than a random piece of paper.
Emails were being exchanged, to what extent? Could you email anyone in the world in 1972? No, like two people could e-mail each other. It's not like you had Gmail or even AOL in 1972.
Yes, email was used for business purposes in the 80s...but it took a long, long time for the internet to reach mass adoption and maturity. Decades.
Meanwhile, Ethereum was launched in 2015. Unless you think the tech has hit an evolutionary dead end...that it's not going to go any further, I think it's incredibly ignorant to criticize this nascent technology based on where it's at today.
The fairer comparison might be between services intended and hyped for mass public use. In that respect the nine year old Bitcoin protocol and its much hyped offspring and first nine years of the "information superhighway" world wide web are, to put it mildly, not comparable in a manner remotely flattering to crypto. And crypto had the web as a vector to push adoption and didn't require a high proportion of users to buy their first personal computer.
Sure, Ethereum will definitely have more things built on it, and attract new users and in all likelihood become more user friendly. But if you can write or evaluate bulletproof code, resolve oracle problems and trust the token's value to remain stable you can automate some transactions without third parties isn't a proposition as obviously universally appealing once bandwidth and adoption is there as anyone can be given access to anything that can be shared on a computer anywhere, any time.
"Newsgroup experiments first occurred in 1979. Tom Truscott and Jim Ellis of Duke University came up with the idea as a replacement for a local announcement program, and established a link with nearby University of North Carolina using Bourne shell scripts written by Steve Bellovin. The public release of news was in the form of conventional compiled software, written by Steve Daniel and Truscott. In 1980, Usenet was connected to ARPANET through UC Berkeley which had connections to both Usenet and ARPANET. "
"Usenet gained 50 member sites in its first year, including Reed College, University of Oklahoma, and Bell Labs,[5] and the number of people using the network increased dramatically; "
"UUCP networks spread quickly due to the lower costs involved, and the ability to use existing leased lines, X.25 links or even ARPANET connections. By 1983, thousands of people participated from more than 500 hosts, mostly universities and Bell Labs sites but also a growing number of Unix-related companies; the number of hosts nearly doubled to 940 in 1984. More than 100 newsgroups existed, more than 20 devoted to Unix and other computer-related topics, and at least a third to recreation"
Sites participating in Usenet were using UUCP, which also allowed email.
The rate of adoption of new technologies has sped up almost exponentially over time. You cannot compare email with Ethereum because of that. If you want to compare it to something, compare it to Docker which was introduced in 2013, and now containers are everywhere, because they are actually useful.
DappRadar is a useful but ultimately hand-curated list. For a more comprehensive look, https://blockspur.com/ethereum_contracts/transactions ranks every Ethereum smart contract by transactions, "users," and "revenues." The top 3 contracts with the most number of users in June had 370K+, 210K+, and 88K+ "users" respectively. (Disclaimer: maker)
This is a serious question as I want to make sure I'm reading this right: CryptoKitties really had only 274 users in the past 24 hours? The USV/Andreessen company?
It's worth noting that at its peak when CryptoKitties transactions hogged the Ethereum network and made it barely useable, CryptoKitties had only 14k users.
To be fair, there's a known solution to the cryptokitty scalability problem (a particular type of "plasma chain" tuned for nonfungible tokens) and this is being worked on and will likely see the light of day pretty soon. This of course does not solve the bigger problem: the small user base.
I was thinking about combining CryptoKitties and Second Life type breedable animals to make collectable ponies you could go play with and show off in virtual reality.
Yes... and as someone mentioned, the amount is very low compared to it's peak - https://dappradar.com/app/3/cryptokitties (you can see all time history) - on 09/12/2017 it had around 14k daily users...
The early internet I used was just as barely usable as the Ethereum network is now. I remember being in the college computer lab and begging on simple things like a page to load. Just a few years later and I was able to watch videos on the computers streaming from the internet. Technology rapidly advances. I still realized back in those computer labs how revolutionary the internet was going to be, I feel the same way about crypto now.
What attributes about crypto, makes you feel the same way? i.e. that it is going to be revolutionary
Because the example you said about the internet (from loading webpage to video streaming) does sound amazing. What's the "parallel" for crypto that you see?
Streaming money. What if you were paid by the second instead of by the hour? Or your bank account filled up live as you worked or performed services? Or companies that provided services to other companies were compensated in the same way? Businesses live and die by cash flow. What if cash flows instantly 24/7?
What if you were able to do micropayments efficiently on the web?
What if many contractual agreements between parties were settled on blockchain, and monies held in escrow disbursed automatically based on pre-programmed rules?
> Businesses live and die by cash flow. What if cash flows instantly 24/7?
Business payments are delayed not because there is an underlying fault in the payment systems (wire transfers are nearly instantaneous, at least within the country), but because businesses sit on payments.
A new technology isn't going to solve this problem. Businesses like to hold onto invoices as long as they can get away with it.
None of the what the crypto-currencies promise is impossible to do with a few independent central vendors implementing that same standards for payments and contracts.
Centralized databases are faster. Centralized consensus is dangerous for the same reason that a dictatorship is dangerous. The organization in charge of said solution would exercise dramatic control over the execution of said code. You need not look very far into the past to see egregious examples of organizations abusing their centralized position over data. I shudder the thought of a centralized actor having the same precise control over all monetary transfers.
Meanwhile, the banking system itself is not centralized. It's quite slow to settle monetary transfers from bank-to-bank.
Right now, Lightning Network is live on BTC's chain. It's instant, near free, and yet it's decentralized.
Look at how certificate transparency is done.. a few servers using same protocol is all it takes.
Most crypto-things have this idea that they servers validating transactions have to be compensated and that anyone can do this validation. (validation == mining)
Having a few well regulated entities do all the mining is a centralized system that can be verified externally. Without all the cost of decentralization. And with the added security that validators are trusted entities.
There are rarely completely centralized consensus. You have different sides which for better or worse create consensus together. You have a law, prosecutors, activists. Sure you have corrupt politicians which centralized power a lot but this would is a problem for crypto space as well because of the people will access crypto through a classical business which can lobby for own interest.
This sums it up better than I could. The wrenching of power away from centralized authorities and organizations (which we have seen abuse us and our privacy mercilessly for their gain) to decentralized applications with no middlemen, that are free of censorship, and can not be "stopped."
I want crypto to succeed, but I have a hard time seeing the parallel you mentioned.
One example benefitted you personally, while the other is a good concept in theory.
In your example of the early internet (too slow to load webpage, to streaming video), you described a direct benefit you experienced personally (you needed to access a piece of content and it got that to you fast)
But when you use crypto, you said it's revolutionary because it "wrenches power from centralized authorities". That is not a direct benefit you experienced personally. That description is a high-level concept.
Reading that, all I can get out of it is "Do things without people who are experts in that field, try to reinvent their expertise on the fly, and fuck up on the way."
LOL. You still need middlemen with cryptocurrencies in all those cases because the middleman is now run across computers that don't scale whatsover (hardcoded limit in processing which is the worst type of scaling possible and scaling is the main reason software is a profitable industry). To make matters worse, you have no way of funding the developers to build the software required for the decentralized software outside of "buy our coins and hope they rise in price forever".
How is there still this much FAD in cryptocurrencies considering their terrible scaling technology and economic solutions?
I'd hire a lawyer because I trust their legal knowledge.
So without a bank, who's going to loan you money? Because unless you're donating pennies from hundreds of thousands of people, it's going to be an entity with a fair amount of $CURRENCY, so basically a bank.
>It's weird because people compare it to the early days of the Internet... but the early Internet was useful from its beginning: you could at least send messages and files across the network, which was incredibly useful to academia and the military and was orders of magnitude more efficient than any alternative.
I don't think the ICO's are being compared to the Internet itself, but to the many early attempts at building webapps on it that ultimately collapsed in the dot com crash. That's what most ICOs are.
On dappradar DAUs are measured by transactions to the smart contracts, which probably means a user is acquiring or trading a token. While writing to the blockchain is costly, it's free to read and verify between users the ownership of assets. Users of DApp games know this, as putting two cryptocollectibles to fight against each other requires only a read operation that will not be reflected in ranking sites.
Well most of the victims of "dot bomb" turned out to really not be that useful. It turns out Amazon does just fine delivering dog food. However there were enough useful services for the web to survive its near implosion in 2000-2001.
dappradar offers a very limited view of the activity on the Ethereum Blockchain. You should look into projects like Golem, it shows a great use case for the Blockchain and definitely justify an ICO.
Iceland has some heavy industry like aluminum smelting which requires massive amounts of electricity. The energy consumption is also including private households. Meanwhile Ethereum is handling currently less than 1,000 users in its core business: dApps.
>
It's weird because people compare it to the early days of the Internet... but the early Internet was useful from its beginning: you could at least send messages and files across the network, which was incredibly useful to academia and the military and was orders of magnitude more efficient than any alternative.
How is running an ICO not useful to people? Get lot of money with only doing a lousy whitepaper, drive ferrari and live luxury life rest of your life. No joking, many people can't imagine anything better.
If you consider being the beneficiary of a boom in what is effectively fraud a "good thing," sure. I can driver a Ferrari if I literally rob people, too, but most people would consider the people I've hurt in the process when evaluating the merits of my actions.
What does the market say? ICOs seem to be very popular so effectively quite a lot of people seem to consider them a good thing, at least currently. Does useful mean the same as ethical? Those people do ICO's to raise money from other people, and it seems to work for them.
So I've been doing alot of thinking lately about traditional VC and PE vs ICO's for work.
Its pretty rare for VC and PE firms to just be blatantly ripped off like a good portion of ICO investors are.
As far as I can this is due to 3 things.
1) Geography, Most VC/PE firms only invest in a particular country and know the laws as they relate to the contracts they sign with companies. This ensures that they can atleast try and go after the founders, legally speaking, if any "shenanigans" occur.
2) KYC, most will only invest after performing due diligence, which always includes meeting the team and confirming through lawyers that the team is who they say they are and they own the IP they say they do.
3) Contracts, I've participated in a few ICO's and never signed anything. I realized I was essentially giving money to a complete stranger with nothing more than an IOU from someone who I'll never meet and in many ICO cases, never have any way to find them.
Fortunetly for ICO's as a legit means to raise money these are all solvable. They just require "adults in the room.".
If you look at the successful ICO's from a professional investors angle(VC,PE) they all followed the above 3 steps.
You mean like regulators and trusted intermediaries? Due diligence conducted by independent third parties? Like the real financial system has always had?
So basically, we went through this whole ICO bubble to realize that things are the way they are for a reason.
> we went through this whole ICO bubble to realize that things are the way they are for a reason
That may be overly reductive. My views on several rules changed as a result of observing the ICO phenomenon.
For example, I used to be skeptical about accredited investor requirments. Turns out, they're super necessary! On the other hand, I think Regulation D could be massively simplified--from a required paperwork perspective--to lower the cost of selling unregistered securities.
> For example, I used to be skeptical about accredited investor requirements.
I agree that we should probably have regulations in place to protect people from scams, but accredited investors are just people with > $1M or > $200k in income over the past 2 years. Basically a way to filter for 'wealthy' people that can afford to lose the money.
> a way to filter for 'wealthy' people that can afford to lose the money
The part I didn't appreciate is it's also a filter for people who can hire a lawyer/adviser to conduct basic diligence. Raising $1 million in $10,000 cheques guarantees virtually zero oversight. That, much more than anything legitimate, has been what ICOs have enabled.
> For example, I used to be skeptical about accredited investor requirments. Turns out, they're super necessary!
This is one area I keep going back and forth on in my head. On one hand, obviously scams are bad, and the fact that people are throwing their life savings into some of these companies is awful.
That said, I am not sure it should be up to Governments to decide who can and can’t invest in early stage startups and how people should be allowed to spend their money. Much of the reason that crowdfunding (Kickstarter, Indiegogo, ICOs) has become popular is because of the lower barrier to entry for contributing to projects/startups. There are a number of companies I would love to invest in, but can’t because I am not a millionaire. I do not really find that fair.
Creating an open market around funding will teach people a lot of hard lessons about money. VCs know that 90% of startups are going to fail. I don’t think it is that crazy to believe that regular people can learn that as well. All it takes is one really bad investment to learn the lesson.
You have to beware of overreaction to the bad investment. Generally folks are not savvy investors. Just look at the large number of small investors in the stock markets. When greed takes hold or FOMO does and lots of people lose money it will lead to an overreaction against investors wanting to put money in companies. This will lead to VC/angel investment drying up which in turn will curb startups.
Remember we live in a country where a cafe has to put the following disclaimer on Hot coffee paper cups "Caution: The contents of this cup could be hot!!"
Very very true. A lot of people make extremely poor decisions with their money. Perhaps there could be a threshold then? Like you are allowed to invest x% of your income/savings? I don’t really know the answer.
I think the cup example may actually be more to prevent restaurants/cafes from lawsuits vs. to actually protect their customers from burns. I suppose it could be a combination of the two though.
The cup example was to show that people are dumb enough to sue a cafe because they got burned by hot coffee. It's an example of overreaction. Instead of thinking "I ordered a hot coffee, maybe this cup is going to be hot and I should be careful", people think "I ordered a hot coffee and because the cafe gave it to me in a cup I am going to assume it's the cafe's responsibility to make sure I don't get burnt" When people get burned they react by finding scapegoats.
This reason is more important than either of the reasons you list:
VC/PE firms are, by and large, staffed with professionals. ICO investors are, by and large, amateurs (I settled on this word, after starting with several less nice ones).
Amateurs are much more likely to get scammed than professionals.
> So I've been doing alot of thinking lately about traditional VC and PE vs ICO's for work.
You are missing part of the story: before ICOs there is a presale phase where some projects finish before the ICO. This is where real competition with VCs happens since the top projects receive more money from non traditional investors using cryptoassets than the one promised by traditional VCs (except in very rare cases).
In this context: (1) Geography does not matter and (2) KYC/AML is enforced.
The advantage for real entrepreneurs is receiving a bigger investment in short time.
Indeed, ICOs offer a great alternative for entrepreneurs: the opportunity to be snubbing VC.
If I can raise money through an ICO without diluting, why would I waste my time with VCs and their beauty contests?
This is the new third way: bootstrap using your own money, they scale up with ICOs. I am not surprised the VC-funded startup world is so hostile to cryptocurrencies and ICOs: it is competition. It means a future where entrepreneurs can opt-out of VC and IPOs. That would be bad to the bottomline: no more preferred stocks with liquidation preferences!
ICOs are in their infancies, so there are a lot of scam, but the market will eventually evolve solutions like smart contracts (or just reputation!). If I was in VC, I would start worrying or lobbying for special treatment - like expending the "investor status" to cover IPOs.
Unless I'm misunderstanding you, you seem to agree with me, with the exception of you thinking geography doesn't matter.
I'd disagree with your idea that geography doesn't matter. I would have more confidence in an ICO in the US than I would in say China where it can be hard to sue someone and collect your damages if you win.
but if you really feel geography doesn't matter then please share your argument for this, I'm ready to learn!!
> Unless I'm misunderstanding you, you seem to agree with me
I am disagreeing and saying that it is VC/PE vs. Presales and ICO the whole story.
> but if you really feel geography doesn't matter then please share your argument for this, I'm ready to learn!!
It is not an argument, it is a fact. For example, you will see a really important investment to an Argentina based company (outside top geographies) in a few months.
All capital flows have a home-country bias. Even securities which are easily bought and sold internationally [1].
Proximity to investors matters even within countries. A start-up raising VC or person promoting an ICO in Silicon Valley will raise more money faster than someone in Montana. They, in turn, will outperform someone in Zanzibar. Doesn't mean it can't be done from Montana or Zanzibar. Just that it's more difficult.
Beyond the obvious geography bias (in general, business networks are strongly connected within specific geographies) the crypto investments are notorious by crossing boundaries in a way not seen by the usual VCs. I mentioned one example before and I have more that will be disclosed to the public in the coming months.
Again, I am not negating the bias towards proximity but seeing there is a new distinguishable phenomenon happening. This phenomenon favors global entrepreneurs in a new way.
Right, but at that point, what's the difference between an ICO and a security? If I was an investor, why would I want to go into an ICO vs traditional means?
A non-security ICO coin is not a share, it's a pre-order for a product that may or may not ever exist.
It's like a Kickstarter project[1], except most of the backers don't actually want the backed product, they want to resell their pre-order to someone who does.
At least, that's how it's supposed to work, in theory. In practice, it's a hotbed for scams. Most of the re-sales happen from one speculator to another, until some fool is left holding a bag of worthless pre-orders.
[1] Which is also incredibly constrained, because it needs to do something useful with a cryptocurrency, and all the overhead and complexity associated with that. [2]
[2] Building a file-hosting service is not good enough - you have to make it a file-hosting service with a crypto-coin bolted on to it for some weird reason.
Do they? I was under the impression that I could sell as many pre-orders for my anti-gravity skateboards, and my marks would have very little recourse, as long as I had the right disclaimers, and I don't sell to Europeans. [1] [2] [3] [4]
[1] Product might not perform as advertised.
[2] Product might not be delivered in the promised timeline.
[3] Product might not be completed at all, due to unfortunate circumstances, such as exhaustion of funds, acts of God, or the laws of physics.
> I could sell as many pre-orders for my anti-gravity skateboards, and my marks would have very little recourse
If you had zero intent of making anti-gravity skateboards, they would have criminal recourse. If you had every intent but were marketing the impossible, they may have civil recourse. Not everything can be disclaimed away. Pre-orders, moreover, are regulated in many states.
Disclaimer: I am not a lawyer. This is not legal advice. Don't scam people.
I think that proving I had zero intent of building the product in question is about as difficult (Or easy) as proving that I had zero intent of building any useful features for my crap-coin.
I'm so surprised that smart contracts aren't being used to release the funds over some set of time, with the ability for community to vote to block it if they feel team has stalled. Nobody needs $20 or $50m on day 1.
Once ICO scams stop working, the world will move towards traditional models. Crypto is out there, and it's not going anywhere. Eventually someone will realize that the smarter move is to create sustainable value over time.
> Eventually someone will realize that the smarter move is to create sustainable value over time.
Most ICO's - if not all of them - are powered by the greater fool theory, sustainable value isn't really on the table.
I see value in the blockchain and some in BTC (but not as much as others apparently do), but the whole ICO concept seems to be just a way to transfer wealth from greedy suckers to even greedier suckers.
One promising example is SpankChain. It's a cryptocurrency specifically designed for the porn market.
Traditionally, it's hard to make money in porn due to fraud and chargebacks. Most payment processors also won't touch you. But crypto has no chargebacks, so it's a natural fit.
One could argue that if you have to dip down to the level of porn just to find some value, ICOs are worth dismissing. But I would say that it's a decent example of the future potential.
Contrary to popular belief, porn was available on Betamax...
More to the point is there any evidence of the mainstream porn user actually adopting SpankChain (or any of the other supposed "blockchains for porn") as opposed to ICO profiteers adopting pornography as a relatively plausible potential future business model to sell unnecessary tokens at an implausibly high value?
Just had a look at the company page of the service. The CEO is a "decentralization laser gun" who boasts about how much money he raised in other ICOs (hmmm...) as well as his favourite computer games. In lieu of an actual testimonial, we get him in blockquote saying "we've honestly got the best team ever". Apparently this is one of the more promising ICOs and yet it's making me feel the SEC parody ICO site was a bit mild...
A good question. And the answer is a bit surprising: community.
If you search for spankchain, you'll likely end up on their discord. There are friendly people to help answer your questions and set you up.
It's the same advantage YC has: by being a meta-layer, you end up attracting everyone who's trying to do anything in the space, rather than one specific aspect. Eventually, the network effects are most of the value.
Assuming I'm someone who wants to spend money on adult entertainment, why would I want to use a coin specifically for that as opposed to a general purpose coin? Same for someone who works in adult entertainment; why would I want a coin who's only use is to pay for porn?
Does it actually solve the problem or just move it by one step/layer? Payment processors are already blocking cryptocurrency exchanges since best way to use stolen credit card is to buy cryptocurrency.
https://news.ycombinator.com/item?id=17432801 was what got me thinking along these lines. If CCBill has a stranglehold on the porn payment processing industry, crypto is a natural threat to them. And that implies crypto has real power to shake up old models.
The market for lemons argument (https://en.wikipedia.org/wiki/The_Market_for_Lemons) suggests this is not true. When a sufficiently large percentage of the market is fraudulent (and in the ICO space it's damn close to 100%), buyers will demand a price premium to compensate for their risk to the point where honest actors can't participate profitably. That isn't happening yet because we're still in the tulip mania phase, but eventually people will want such high returns for the absurd amount of risk in the crypto space that no one will bother.
It is important to remember that what we are seeing is a v1 of the ICO model - it is likely that future versions will be able to implement more controls and governance mechanisms like the kind you described.
Smart contracts don't work because they require all the funds to be held in escrow. So if I see the need to release $50 million then I need to hold that in escrow and during that time I can't use the capital for other purposes.
Many of them are investing because there is money to be made over the course of a pump and dump.
They don't actually want any pre-order tokens that entitle them to 2 GB of storage on a distributed crypto-file-system, or whatever the ICO promises.
Think ticket scalping, except that the tickets are for a concert that may or may not happen. (Because the band hasn't actually written any songs, found a drummer, rehearsed anything, rented a venue, or even bought any instruments.)
Why would anyone issuing an ICO want this? Even if you're not a scammer, why would you want the community to be able to block your funding due to unforeseen circumstances?
"We also show that there is a positive and convex relationship between (log) market cap and (log) number of Twitter users, that nearly all ICO capital
is raised by crypto-companies that continue to be active (on Twitter) after 120 days, and that daily Twitter intensity is associated with positive returns that day but negative returns in the future, suggesting overreaction and reversals. "
"It suggests that scams, while plentiful in number, are not as important in terms of stolen capital because investors are shrewd enough to spot (and underfund) them."
Haha what do you know. Another day, another anti-crypto article on the top of Hacker News.
In this case, I agree with the overall sentiment. I don’t think these companies are actually “dying” though, but rather they were probably created as get rich quick schemes, so they took the millions of dollars they raised and then sailed off to some island somewhere.
From the report
> We use intensity of tweets from the cryptocurrency official Twitter account after the ICO to estimate that the survival rate for startups after 120 days (from the end of the ICO) is only 44.2%, assuming that all firms inactive on Twitter in the fifth month did not survive.
Not sure how I feel about that methodology, but probably many of these companies never planned to actually issue a product in the first place so it may very well be accurate.
I love it and agree. It's like this at the start of every major change that has an impact on all levels of society. Even if these tokens are failing, they exist because they caught some unique insight into how the tech will change the world and they were able to communicate that clearly enough to get many, many investors. That they failed or were money making schemes is irrelevant because someone will see the core idea once the sector has matured and use that to build something cool and useful.
It should also be pointed out that 50% of small businesses fail within 5 years, and between 70-96% fail within 10. You'd think people so incompetent at identifying success would know when to STFU by now. "Hey, our industry is the go to source for how to run a business. Businesses have a 96% failure rate. Please continue to listen to us. Why are you laughing?"
- "Congratulations, the crypto people just learned why regulations exists. Soon enough, we'd need to create each and every regulations in financial sector but for crypto"
- "Oh, to solve that problem, they'll have to do this other thing, and another thing, and soon enough you'd have recreated each and every aspect of our current financial system which they aimed to remove"
- "Can we stop using the word 'crypto' to mean 'cryptocurrencies'? I downvote any article's headline which uses 'crypto' to mean 'cryptocurrencies'"
Vice - freeCodeCamp - BitTorrent - xhamster - The Guardian - Washington Post - TinyUrl - JS Bin - Sitepoint - Smashing Magazine and much more are already verified publishers...
Even dappradar.com that was quoted in this thread !
Indeed. I am curious to see how brave turns out. Right now I don't use it as it feels too bulky and I don't want to mess with bookmark exports - who knows maybe that will change.
Wait so BAT with its $250M market cap has < 600 sites in the Alexa top 1 million??? That's like 6 hundreths of a percent. That's a terrible rate of adoption considering the hype behind BAT.
>Wait so BAT with its $250M market cap has < 600 sites in the Alexa top 1 million??? That's like 6 hundreths of a percent. That's a terrible rate of adoption considering the hype behind BAT.
The script is still running at the moment, right now it's 600 sites in the top 230k, around 0.25%
Golem is live. Augur is going live today. MakerDAO has a very interesting stablecoin called Dai that's live. Status' mobile app is now mainnet by default. DigixDAO is live. And many more in testnet phases. But don't let reality mess with the cynical perception that the hn crowd wants to portray!
Both Augur [0] and MakerDAO [1] have centralized points of failure that would allow the owners of the contracts that define the tokens to halt transfers, withdraw funds, or in the case of MakerDAO, mint tokens out of thin air.
Oh good, all of those blockchains actually function.
That totally means that they are worth investing in and that the people who created them give a damn about turning it into something more than an ICO...
/s
The question was about success, not trivial viability as a blockchain product.
That’s actually a conservative number. We [1] design UI/UX for all sorts of startups and the last year a good chunk of that was for ICO related projects. The vast majority dies somewhere during the sales period.
So you actively seek out and work for companies that you believe are most likely pure scams? I don't mean this to come off as too judgmental, I'm honestly curious what your take on it is. Does the fact that you know your client is trying to rip people off factor into the decision to take on a project?
Or do you think the ICOs you design for are all well-intentioned and just so happen to all fail after/during their token sales?
We never seek them out specifically and it’s impossible to tell if someone is planning to scam people. Pretty much each of those projects start of with seemingly great founders, boards of advisors and even tech. Some projects did succeed and others are in progress right now so who knows how things will evolve.
The research in the article was not quite clear. Was their only “sign of life” measured by tweets? What about capitalization, transaction volume...anything?
Yes, this is a totally trash article but just look at how the hn crowd laps it up because it fits in with their narrative about this tech. What a retrograde place this has become.
Missing the point. TFA uses a metric which is unable to distinguish between success (working instead of tweeting) and failure (scam). That's beyond wrong...
No, 'the point' is that these ICO's seem to be funding not much at all, and though the metrics may be 'iffy', that's a function of the total lack of transparency of these ICO companies in the first place.
Every regular company that has taken on funding at least has a 'web site' with 'some information' and definitely communicates with investors etc. on what's up.
That it's not really even possible to know 'whats up' with companies that have raked in millions is in of itself very telling. Telling enough to keep me and most others miles away.
As someone who has actually worked on such things, you'd expect updates to drop off to a trickle on an actually productive engineering project. At least compared to the pre-ICO hype. A few regular blog posts every other week, vs. a constant storm of promotional material and hype.
I've actually worked on such things, too, and in my experience, "I'm too busy programming to let you know my company is still around" isn't a particularly good excuse even at tiny two- and three-person shops. When I've seen that happen at cottage software companies in the past, it has never been a sign of health: more often than not, when they finally communicate again, it's to tell us that they're closing shop.
And more to the point, tiny two- and three-person shops probably aren't doing ICOs. If your company is big enough to undertake a public offering of any kind, it's damn well big enough to have someone on staff whose responsibilities explicitly include some kind of community relations work.
"Still, all investors should probably sell their coins within the first six months, the study found."
This is a baffling statement, mostly because if you sell your "coins" to someone and they keep them too long, they will lose everything. Which could lead to liability questions.
I mean, you buy those coins and sell them as fast as you can, because you know that they won't be worth anything within in days or weeks, it could be argued that you committed security fraud. Well it could also argued that the ICO itself is already fraud, because of the huge risk involved.
Shares and similar tokens don't work like that on the secondary markets like stock and token exchanges. One person clicks sell and another buy and very seldom does anyone worry too much legally about the reason why, insider trading being the occasional exception.
Issuing shares from scratch is different and there you can get done for fraud.
Is there a legitimate reason why ICO-backed projects seem to need so much money before even making a working prototype? Don't startups normally have to have a basic product to show off before they get investors?
Almost all successful ICOs in the past 6 months have working prototypes. Only in the very early stages, June 2017 - November 2017 was this not the case.
In contrast, the ICO for SingularityNET has actually done quite well and received 5 times the amount of demand expected for their token sale; they postponed the end of their token sale date to properly handle the overwhelming demand. Feels most ICO sites are giving them 4/5 rating on average, but we'll how that goes. I think the reason this one in particular is doing so well is that the purpose of the sale feels useful, which is "to let anyone create, share, and monetize AI services at scale". According to them, the world’s first "decentralized AI network" has arrived.
Anyone have thoughts as to why this ICO could be different? ICO Drops says it was a whitelisted ICO:
Interesting note from the website: "While we are aware that the AGI token is currently being traded on some exchanges, we do not encourage or facilitate this exchange trading in any manner. Speculative secondary trading is against the spirit of the AGI token and SingularityNET project. We strongly discourage speculative secondary trading and officially ask AGI token holders to act accordingly."
If one compares IPO->ICO, in that context then the SingularityNET ICO may not seem to have to forecast of "profitability" that one would usually associate with a successful public offering. However, in the context of the purpose of the AGI Token they offer, the initial demand was high and in fact overshot, pointing to anticipation (or hype, but I believe it was genuine anticipation) for the coin. It sold 500 million tokens, reaching the ceiling in 24 hours. Sales dates were pushed to allow more sales due to overselling. That points to an initial success, I think.
Looking at the purpose of the AGI Token which is to create an open AI exchange (if I understand it correctly), where AI developers use their services in exchange for the AGI token, or for other services, then looking back at that anticipation and over-sale of tokens, it appears there are interested and active investors who are looking to make this coin work. To me, that is successful in comparison to simply having a Public Offering where lots of people invest, often to only lose that money later. This seems to have a purpose.
What points to current success, the "doing so well", is the more than decent ratings a large portion of ICO watchdog sites are giving it for now (although many ICO watchers acknowledge the level of hype to date has been high).
Looking at the current numbers, you're probably going to say "meh"; especially considering the ICO hype pushed the price up, then it dwindled down to a low ebb and flow. But that isn't why I see high expectation, still, for this coin, right? It still has intentional use built into it, and according to the website the Platform Beta Release is coming in the next month or so, at which time the coin will begin to do its work.
So, for me, "doing so well" means there was meaning behind the ICO beyond just economics, the interest was there and was overwhelming, the project has code tied to the coin that is going to go live soon and (from what I read) anticipation is still there within the AI community and the investors.
But again, I ask the question here because compared to the statistics in the article above, SingularityNET appears to be... doing well.
I'm in no way whatsoever connected with the SingularityNET ICO or project. I actually couldn't get on the whitelist but I'm curious if the underlying point of the ICO is why it "appears" to be doing better than your average one. Could it be a model for future projects and whether they decide to go IPO or ICO. Clearly more successful ICOs are good for the model in the long run.
There have been hundreds of ICOs and some of them are actually trying to make an interesting product. I'm guessing this one is above average though the return has been unspecatcular. It says 1.08x on the website in USD terms.
Zil is an example of one building something with a real purpose and non trivial technology - a sharded blockchain that should be able to scale indefinitely which is up 20x in USD. Built by university researchers rather than obvious scammers https://icodrops.com/zilliqa/
There are some interesting things out there amongst the silliness.
Zilliqa is pretty cool, actually. I read the whitepaper and found the pieces on Zilliqa consensus and incentivizing miners based on their sharding architecture that "allows the mining network to process transactions in parallel and reach high throughput" very interesting. A great example of tech that presents solid algorithms or functions that do real work, or that could set the stage for new future work, within the context of cryptocurrency.
The headline is misleading. It says ICOs "die". The actual article says that after 3-6 months, returns from a cryptocurrency are no better than the overall crypto market.
This is like saying after 6 months of an IPO, the stock does not outperform the S&P 500. It doesn't mean the IPO is dead, or the stock is dead.
How is this possible? Most of these ICOs are raising way more money than a tradition VC backed seed/series A round. Shouldn’t they have enough funding to limp along for few years? I wonder if it takes 4 months to give up on the idea or steal the funds?
The article gleefully ignores the positive side of these investments documented by the authors of the study:
>We find evidence of significant ICO underpricing, with average returns of 179% from the ICO price to the first day’s opening market price, over a holding period that averages just 16 days. Even after imputing returns of -100% to ICOs that don’t list their tokens within 60 days and adjusting for the returns of the asset class, the representative ICO investor earns 82%.
Not saying I want to participate in any ICOs, especially now that a lot of frothiness has gone out of the market, but this article is clickbait garbage if they can't even summarize some of the main points from the abstract.
Like it or not blockhains are here to stay. Nobody is going to run behind VCs looking for elite money in 20 years from now. Isnt it obvious? Blockhains are going to redistribute the wealth from the wealthy elite few to the masses. More and more wealth is being generated from nowhere. Just because there are some spammy ICOs now doesn't mean it's the end of the blockhain and ICO. This is going to be another rare instance in which hacker news is going to be wrong like Dropbox incident. Mark my words.
Securities deregulation. On the one hand, investors deserve protections. On the other, has the regulation gone too far by design, locking out the middle class it used to serve so well. Why do companies wait until most of the value is already realized before they IPO these days
Crypto could be Uber for securities, ignoring the regulator and using technology to self regulate, or by operating out of countries with lighter regulation
This is a fallacy. Generally regulations tend to protect consumers or vulnerable groups from harm. The recent global trend towards deregulation and austerity moves in the opposite direction of social democratic movements in Germany, Scandinavian countries and much of the EU. The end result being more of a wild west free for all that results in something more like the Gilded Age of the 19th century than a well-optimized free market like imagined on the Jetsons.
That said, there are certainly cases where financial market regulations have hurt the middle class. For example, a pattern day trader rule was imposed in February 2001 which required a $25,000 minimum balance to trade on margin:
More about trading on margin (in the most basic sense - potentially doubling your gains but wiping you out if your total stock holdings equal what you borrowed, triggering a margin call):
The pattern day trader rule was introduced after the dot bomb with several stated goals like protecting inexperienced investors or limiting volatility. But it was really yet another tactic to keep the most lucrative forms of trading in the hands of wealthy/institutional investors and leave the masses in the slow lane of trading with their own money.
It's extremely important to know the nuances of regulations and their unintended consequences. But instead we only generally hear about deregulation from politicians, because they know that insiders (their base and lobbyists) will always win over the masses in a fully deregulated economy.
P.S. I didn't downvote you, because the sentiment you expressed is widespread and needs to be addressed
> But it was really yet another tactic to keep the most lucrative forms of trading in the hands of wealthy/institutional investors and leave the masses in the slow lane of trading with their own money.
Accounted for risk, the most lucrative form of trading is buying a Vanguard index fund, and sitting on it for 30 years.
Discounting risk, the most lucrative form of trading is flying to Vegas, and putting all your money on red.
> But it was really yet another tactic to keep the most lucrative forms of trading in the hands of wealthy/institutional investors and leave the masses in the slow lane of trading with their own money.
This is entirely subjective and it actually also happens to be wrong.
That's the great thing about subjectivity, I could say the same thing about your comment unless you have proof that no day traders were negatively affected.
BTW I got interested in this sort of thing after this law blocked the start of my day trading career :-P
You're the one making the wild claim without proof, so our comments are not the same. The burden of proof is on you.
I don't have to prove that day traders weren't negatively affected. In fact, even if one of us proved they were affected, this wouldn't support the argument that the intention of the bill was "to keep the most lucrative forms of trading in the hands of wealthy". That's just unsubstantiated hot air.
Most importantly, you haven't even proven that day trading is "the most lucrative" form of trading and that's probably an even wilder claim! While the burden of proof is on you again, I can already think of two reasons why it is incorrect: (1) day trading incurs in significant transaction costs due to the frequency of the trades and (2) though you may get outsized results on a given trade if your gamble pays off, it's just speculation so it will never beat the market on a risk-adjusted basis. Unless you're a hedge fund with significant resources to take on huge positions and minimize transaction costs, there is really no easy alpha left in the market. Everything's already priced in these days.
It's ironic how the crowds of pro-crypto-currency shills so predictably whine and throw around the word "hivemind" in response to thinking people reacting rationally in response to their mindless greedy knee-jerk decentralized marketing of fraudulent pump-and-dump schemes.
I really don't think this is very meaningful metric for anything.
Sure where there is a lot of money there is a lot of people trying to weasel their way in. But so far the usage has grown.
Much more companies will fail just like on "the internet" but the blockchain just like the TCP/IP protocol is here to stay and the coming generations will adopt it as if it's the most natural thing in the world just like we did with the internet.
I think the RNDR token is the only one I've seen that really makes sense. https://rendertoken.com/. And the people behind it (Otoy) are very reputable.
Golem has a working product, integrated into blender. It lets users trade rendering time with each other
It works well for 3D graphics because it's easy to verify the work was done and it's low risk. With more encryption research the model would work for more types of computing
There was that one on Silicon Valley where the coins represented credits on a distributed computing network. It sounded pretty legitimate to me, but of course it's just fiction.
Over in the real world, I haven't heard of any legitimate ICOs.
Some thoughts from the inside. My company (Inbot) is currently in the pre ICO phase: we're selling tokens but not on the blockchain yet. We're very hesitant to move to the next phase precisely because of the tendency of many ICO companies to collapse almost straight away. Investors dumping your coin on the day of the ICO is kind of deadly for its valuation and if your ICO is attracting that kind of investors, something is indeed wrong. Quite many ICOs are set up such that this is actually the goal rather than something they want to avoid (pump and dump). We're kind of going against the trend here by planning to survive this initial phase (hard).
The reason many companies are doing ICOs regardless is because it actually makes sense if you look at it as a financial instrument that gets you funded quickly to the extend where you get similar capitalization comparable to a big series A or even B round.
Like with high risk investments, ROI is pretty bad; except when it is not. Most ICOs will fail but some will not. This space continues to be so hot on the premise that there are a few unicorn ICOs out there that are actually going to make it. Ironically, this is leading to a lot of misguided investments by, well, idiots. This in turn is leading to a lot of successful attempts to separate these idiots from their cash. Blame the idiots, not the ICOs. Hence Dogecoin, PonziCoin V3 (this is a thing !!!), and similarly poorly veiled scams. I applaud these people for being able to make so much money with so little effort.
There are many issues with dapps. IMHO it doesn't make any sense to write dapps right now unless your roadmap spans several years because the technology is very immature, the infrastructure is not there, and the fixes are years out from becoming proven to the point where you can rely on them to function as advertised. This requires more than proof of concept. Ethereum and bitcoin are out there with many users that are trying to exploit it in any way they can. That makes it battle tested. Alternative technology stacks exist but lack this type of user base and scrutiny.
Most of these alternative stacks still have serious flaws conceptually and practically. Quite a few of them seem to be moving the problem rather than solving it. What's needed is orders of magnitude improvements to throughput and scale for dapps to be usable by the masses. 50k transactions sounds nice until you realize that is globally and needs to service the entire ecosystem of dapp applications. That's not a lot compared to a modern db running on off the shelf hardware. Once users actually show up, that kind of traffic can be caused by a spike in usage on a single dapp. If you have many of those, that will be happening all the time.
Right now the only things dapps make sense for are things that are relatively high value so you can justify the cost and have enough per transaction revenue and very low in transaction volume so that the whole thing doesn't collapse when you actually get some traction. That pretty much narrows it down to limited amount of trading of coins on top of ethereum, which is indeed the dominant type of dapp in use today.
Some successful ICOs are actually about fixing this problem. They are long term investments in tech companies that are likely to fail but very lucrative if they don't. E.g. Telegram is a high risk investment but they are now well funded and have enough runway to execute whatever it is they are doing for the next few years. And they have a decent tech team. Similarly IOTA, QTUM, HashGraph, and others are well funded companies well capable of executing roadmaps that will take quite long to deliver results. Are those bad investments? Not if they succeed. Is that any different from e.g. the likes of Google bank rolling Magic Leap? Or indeed any kind of VC tech investment?
I imagine the facade must be maintained long enough for the checks to irrevocably clear, which can actually take a while. The big bad evil fiat government money system has the advantage and disadvantage of being able to claw back transactions for quite a while, since it's basically the fundamental primitive of the system that ensures integrity of the system. (That is, at the foundation, the money system tends not to be about preventing fraud so much as being able to remediate it after the fact. There are many higher layers that are about preventing it too, of course. But at the very bottom, it's about remediation.) If you're going to hike away with investor money, the whole system needs to clear all those tentacles away from your Cayman Islands (or whatever the hot destination is) account first.
> fiat government money system has the advantage and disadvantage of being able to claw back transactions for quite a while
Recently helped a friend extract his company from a wire fraud scam. Wires, particularly international wires, are surprisingly irrevocable. You basically have to get the receiving bank to agree to send the money back.
not commenting on weather facts are sane or not. bloomberg has consistently been publishing negative cryptocurrency articles each time the market goes up to the point of suspicion
Do you all have any idea what this is talking about? I've never heard of ICO and you're all using it as if it's some familiar and obvious thing with no explanation.
An ICO is an "Initial Coin Offering", it's supposed to be like an IPO except instead of offering shares, you're selling cryptocurrency coins. ICOs are usually framed as a way to fund a project or business, usually related to cryptocurrencies or blockchain technology in some way. The idea is that the project's success will increase the value of the coins you bought and you'll be able to sell them for more later.
The main difference is that the coin is just a coin, buying it won't make you a shareholder and you aren't subject to the regulation that IPOs and shareholders are. That regulation makes it difficult to scam investors by starting a dummy company, pretending it's a valuable operation, selling shares in an IPO, and then running away with the money. Doing this with an ICO is much easier, and there's a lot of concern about how many ICOs are frauds.
I’m not sure I get the point of an ICO. It seems like a company issuing monopoly money. It even seems like this would have been possible before crypto—literally just Monopoly money to people and let them trade amongst themselves.
I guess Monopoly money is easy to duplicate… but so is crypto in a way because you can just start your own currency that uses the same block chain to create more tokens.
Well, just remove the company, the product, and the regulation, and that's an ICO.
The issuer of the coins/tokens do not have to buy anything back. The idea is that they will increase in value and function, and others will want to buy them from you.
It goes like this:
1. "RichCoin" is created and the creators begin selling them at 5,000 Richcoins for 1 Bitcoin. Ads are pushed across social media platforms and web communities are seeded with information that encourages people to invest.
2. 50,000 people spend a total of 1000 Bitcoins buying the first 5,000,000 RichCoins.
3. After public launch, 5,000 people sell their RichCoins to late investors, netting ~20% profits.
4. The remaining 45,000 people "HODL", hoping that their $1 RichCoins will one day become $100 RichCoins so that they can move to a private island and never work again.
5. RichCoins fall to 10% or less of their ICO value as all official websites disappear.
6. The creators of RichCoin, who long ago converted their 1000 Bitcoins to $5,000,000 USD, move to a private island and never work again.
Shouldn't be a problem with coinbase or other large exchanges. Getting the cash out of bank might be actually harder, AML systems will flag huge transfers from known crypt-exchanges.
The "monopoly money" perspective isn't wrong, and in general an ICO for a coin that's, say, "bitcoin but a little different" doesn't make much sense. Bitcoin is supposed to be a currency, so an ICO for something bitcoin-ish is like taking investments for a new kind of dollar. You have to get them into circulation somehow, and trading currencies like commodities is a real thing, but it doesn't really explain the current ICO hype.
It makes more sense if you look at most of the ICO tokens from the ethereum point of view, rather than bitcoin. Ethereum and its derivatives let you use tokens as components of distributed applications. Unlike a "pure" currency, which is useful only as a medium of exchange and has no intrinsic value, these tokens let you use the distributed application so they're worth whatever the application is. They aren't really currency, although you can usually buy and sell them and they're used to give the application some kind of market behavior.
Something like filecoin is a better example. The filecoin project intends to build a distributed storage system. If their project succeeds, the filecoin network will let you exchange coins for the network's storage, and storage is valuable so the coins are valuable too. Ideally, they'll use the funding from selling coins in an ICO to make the project so useful that a coin's worth of access will be worth more than what you paid for it during the ICO and the people who participated come out ahead.
Personally I'm still not very impressed with most ICO projects, but at least all of them aren't completely insane when you look at them this way.
Initial coin offering. Like selling shares to raise capital but instead of shares, you get cryptocurrency tokens. Without regulation, it has a much lower barrier to entry, but some barriers are safety barriers.
There are people getting into crypto currencies purely because they hear about others making money doing so. This means there are also predators taking advantage of the lack of barriers. A crypto might not be a scam but when scams are easier to make than real things, the scams will be more numerous.
It's weird because people compare it to the early days of the Internet... but the early Internet was useful from its beginning: you could at least send messages and files across the network, which was incredibly useful to academia and the military and was orders of magnitude more efficient than any alternative.
Now, all we see is rampant fraud and a complete disregard for the environment [0] with no gain in efficiency. It's high time we hold "crypto-anarchists" accountable for these issues.
[0] The Ethereum network consumes more electricity than Iceland https://digiconomist.net/ethereum-energy-consumption