>Cryptocurrencies have existed for eleven years, they should have something to show for right now.
IMO this argument is pretty seriously flawed. We tend to think of revolutionary technologies as "overnight successes" but that's rarely the case.
If we had abandoned the smartphone 11 years after the first attempt at, we would never have the iPhone. If we had abandoned combustion engines 11 years after their first attempt, we never would have had the automobile. New technology is hard and requires a lot of tinkering.
I also think the author fails to capture what people look to as the potential of crypto. While there is a definite subculture of neo-Austrian economics, a lot of us are also interested about the ability to structure new forms of digital markets, make money programmatic, and increase the structural privacy of the internet.
You are selling the author's argument short. They are suggesting that cryptocurrencies have no big positive qualities, but so many negative qualities that it is possible to list them in a table and categorize them. When something is net-negative, we can ask whether we should continue harming society by propagating it further.
Exactly. Bitcoin is the first flip phone. Let's see what things look like in 20 years.
The one point I agree with the author on is that the electricity waste is unnecessary and unsustainable. Proof of Stake or other alternatives, if there are any, should be a requirement of all future cryptocurrencies.
You've passed the flame-bait territory and are headed straight for troll-land. I'm so angry at myself that I got caught in your scheme, you wouldn't believe it.
This post presents a very low effort argument. It's basically taking the argument "the only reason anyone would want privacy is if they have something to hide" and applying it to money "the only reason anyone would want financial privacy is because they are buying drugs".
It all depends on what kind of level of privacy you expect. Absolute privacy is an illusion people seem to chase. Why would you have any rights to that?
tl;dr - "So in short, I think that cryptocurrencies provide nothing of value to society. They do however facilitate crime and contribute to climate change."
Is this satire?
I'm wondering if this author covertly intends to strengthen the perceived utility of through this article.
Yes, near-free & instant to exchange, borderless, alternative to gov't, privacy-preserving, competitively evolving etc. digital money provides 'nothing of value'. /s
Being able to send money to a friend in the US from Greece has value to me. Currently, I can't do this without a lot of hassle, since there's no overlap between what banking methods we use in Greece and what they use in the US.
The problem is that ~0 stores accept cryptocurrencies, so my friend can't do anything with it.
Nowhere near as convenient, fast or cheap. I guess there's Transferwise, which is still more expensive and slower, plus they banned me as a user, which cryptocurrencies don't do.
No, you're making the bold claims, it's your job to demonstrate how cryptos have been materially valuable for and society or organization.
Take some time to do it, because you might come to realize how fundamentally unpragmatic cryptos are.
Also, you might discover that there are some existentially wrong assumptions regarding crypto that make it all moot: there is no such thing as a 'trustless decentralized currency' or store of value because currencies are inherently a form of the social contract.
Crypto advocates, it seems, don't even know what a currency even is.
There will be a place for digital currency but it will be much as you see it today, blockchain in currency and everything else will probably fade away.
Cryptos are a neat idea and a meme, an intellectual fashion, like Uggs or Emo.
> Also, you might discover that there are some existentially wrong assumptions regarding crypto that make it all moot: there is no such thing as a 'trustless decentralized currency' or store of value because currencies are inherently a form of the social contract.
The extreme energy waste is the most salient point to me. Imagine what you could have if you took all the energy spent mining crypto and instead had spent it on building solar panels or N95 masks or high speed rail.
I don't know, how much energy is spent producing reality TV shows? To me, those have less value than instant, trustless payments.
That's not to say that I don't hope non-PoW cryptocurrencies become more popular, we should conserve energy when we can. I haven't looked very much into it, but Stellar seems interesting, and it's not PoW.
While I'm not a fan of reality TV, I know plenty of people who are, and whose lives are enriched because of reality television. There is no accounting for taste.
I don't know how much people's lives are enriched by cryptocurrency. Other than the people directly involved in mining and speculating on it.
I, for one, enjoy watching all the speculator drama, much like watching a reality TV show. Plus, it lets me buy LSD online, which is something that I believe I should definitely be able to do but currently cannot.
Unjust laws change by disobeying them, and if you clamped down on that 100%, neither homosexuality nor cannabis would be legal now.
What if you take "energy" to mean more than just electricity? The money to pay for the electricity to mine could be spent on something else. Or going even further back the work that was done to make the money to mine could be allocated differently. What could you build instead of the video cards and warehouses and A/C's used in mining?
"Money laundering and buying drugs"
"No intrinsic value"
"Energy waste"
These arguments have been in the wild for over 10 years and discussed by both sides in much detail. The article brings just personal opinion of author and probably the most dumb down version of these arguments I have seen. Not sure if satire or not.
First, society is a semantic shortcut, not something that actually exists as something that can experience gain or harm. Only individuals can, and many have, and do.
I had an unbanked contractor, a refugee from Russia who could not get a bank account anywhere he went, and had to hop countries a lot as visas expired, and I paid him in Bitcoin even though he was completely unfamiliar with it when I proposed it, because we could find no other solution. He and I both benefitted substantially from that. I'm aware that other solutions exist, and we had exhausted all the ones we could find, as one by one my bank started rejecting transactions as fraudulent.
For most of what we want to do in the US or the rest of the first world, we have a reasonably functional banking system. For most of what we want to do internationally, at least commercially or with trading partners able to work with approved banks, things work pretty OK. There is a substantial part of the world that doesn't live under these conditions.
Thanks for sharing your story. I'm sorry for the Russian refugee, but that kind of scenario - although noble - doesn't seem to really justify what 'we are doing' with crypto.
Indirectly, your scenario seems to admit that for the vast majority of the world, cryptocurrencies don't add much.
Every single downside listed in the article already existed way long before cryptocurrencies were even invented.
Yet another article that confuses security of exchanges with security of cryptocurrencies.
Cryptocurrencies are digital asset designed to work as a non-centralized medium of exchange.
You can ask any citizen from countries that went through hyperinflation, capital control or cyprus-style bank account seizure (bail-in), what is the value of cryptocurrency to them. Then ask yourself if and when it can happen to you.
To any person living in Europe, I hope you guys know the bank account seizure that happened in Cyprus in 2013 has been used as a template to create an european law named "Bank Recovery and Resolution Directive"(BRRD). Some people are going to learn the hard way:
How would you explain the inner workings of fiat currency to someone in simple, understandable terms?
"Imagine if the person in your neighborhood with the biggest house ran a printer in his garage that printed off paper that said "1 Buck" on it, and instead of giving the pizza delivery guy silver coins in exchange for their service, gave them bucks. Also he demands you pay him "$1 Buck" a week or else he'll take a buck worth of your stuff every week and if you can't pay he'll break your legs. And if you started printing your own "1 Buck" notes, he will come and lock you in a cage."
This explanation seems perfect to me because it illustrates the absolute insanity of all fiat currencies in one simple sentence.
It captures the unimaginable unfairness of maintaining fiat currencies. And it also captures the dark side of fiat currencies: perpetuation of a system of sovereign violence.
At this point fiat currency enthusiasts are rolling their eyes and sigh. This point has been made many times over. I know, I'm definitely not the first to criticise fiat currencies this way.
I do have a simple challenge though:
Can you please show me the benefit to society of fiat currencies?
Cryptocurrency is:
* Resistant to government censorship: Short of total firewalling and mass whitelisting of all IP packets and blacklisting all encrypted traffic, governments have difficulty controlling transfers.
* Resistant to capital controls: Centralized banking can prevent you from using your money. The Federal Reserve reduced the reserve requirement to zero and cut interest rates to zero on March 15th. The FDIC released a PSA video advising people not to withdraw their money from banks. In June 2015 Greece closed its banks for almost 20 days and limited cash withdrawals to 60 euro. With cryptocurrency there is no bank to close, no authority to enforce withdrawal limits.
* Deflationary, not inflationary: Cryptocurrencies are all different, but Bitcoin for example has a strict upper ceiling on the number of bitcoins that will ever be produced and 85% of that supply has already been produced. Meanwhile the Federal Reserve is pumping billions of dollars into banks by buying their bonds and securities and is speculating about expanding its purchasing. Venezuela has had issues with inflation and hyperinflation due to excessive production of currency and deficit spending. They even launched their own cryptocurrency in an attempt to have a commodity-backed and more stable currency, which flopped because it was still under central control of the Venezuelan government for which there was little trust and apparently it was a scheme to avoid sanctions, which is laughable because...
* Resistant to Sanction: Venezuela could just start selling its oil for Bitcoin directly, obtaining a reserve of uncensorable value that it could use to regain its economic strength. In fact it is attempting this, which is underreported. Sanctions are economic warfare which harm the poorest members of a nation the most. Whether you think a nations' leaders are criminals or not, do the people deserve to suffer at the hands of the world's markets directed by the economic juggernaut and political interest of the U.S.A.?
* Low Fee Remittances: Using cryptocurrencies, people can easily send money across borders to family and dependents. If someone working in the U.S.A. wants to send, by Western Union, $200, or about a months' wages MXN, they pay a fee of $5-7, which is approximately the minimum DAILY wage in Mexico. Transfer in bitcoin, the transaction fee is about $1. If you have to also purchase your bitcoins (instead of receiving them directly as wages) the fee goes up to about $4.
* Automated Finance: On Ethereum you can earn 4% interest on your deposit with the Dai Savings Rate. Other protocols offer up to 10% or more for lending cryptocurrency to others who take small loans, all with no middleman other than an automated contract. No loan application, no credit check, no redlining. This is a huge silent movement for microfinancing and is growing at a steady rate, granting underserved populations access to financial services. And what's the best rate you can get from a centralized bank? 1.7% and likely to drop in the coming months.
These are all theoretical problems that have not shown up in real life in the west. Also there is no evidence that cryptocurrency will truly address those topics at scale, meaning full for a significant part of the population.
But cryptocurrencies are neither fast, nor free. They're slow compared to regulated banking transactions, and use up vastly greater amounts of energy and resources.
Bitcoin works because it provides a transaction platform that’s virtually impossible to censor or control and a monetary system that is virtually impossible to debase.
Bitcoin provides those things through law of the universe - you can’t make energy out of nothing.
If you figure out a different way to provide those things, feel free to make your alternative to Bitcoin, but don’t make these dumb comparisons and arguments that just demonstrate your complete lack of understanding how and why something works.
> Bitcoin works because it provides a transaction platform that’s virtually impossible to censor or control and a monetary system that is virtually impossible to debase.
Why is this good? What tangible problem are we solving here?
It’s good because it solves problem for me. The problem it solves is absence of financial system that is impossible to censor or control and monetary system that is impossible to debase.
Money you think you have in your bank are actually just a promise recorded in a database. Even if that promise is fulfilled and you get cash on your hands, it can be diluted into worthlessness by printing trillions more. All of that is controlled by few guys behind closed doors.
None of that applies to Bitcoin. Is that good enough example from real life?
No, because it's such a narrow view on currency. Because governments have every incentive to keep currencies stable, so they will never become worthless.
Cryptocoins are not backed by anything, making them very volatile and thus unsuited as a foundational currency for any stable society.
This example only illustrates to me that cryptocoin proponents only have esotheric hypotheticals in mind.
Sure Venezuela happened, but those are exceptions. When the stock exchanges went down hard due to corona, the cryptocoins went down hard too. But regular money kept stable.
Yes fiat money is just a record in a database. And that's it for cryptocurrencies. But fiat money like a dollar or euro is so much more.
Fiat is controlled by governments, governments are controlled by humans, humans are often irrational and there are many more examples than just Venezuela which is the only thing you could think of.
Bitcoin is governed by math and that’s why it’s valuable to me.
Bitcoin is beneficial to society because it provides choice. I don’t care if you don’t get it or if you disagree.
“The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve.”
– Satoshi Nakamoto
We are currently at banks being required to keep a ridiculous zero percent in reserve.
That's not a problem exclusive to conventional currency. Consider the ETH rollback. That people mostly prefer Ethereum to Ethereum Classic also shows that they don't find this need for trust to be a problem.
If you cant trust anonymous cypherpunks and organized crime to be fair and honest stewards in an anarcho-capitalist black market then who can you trust? Bankers? Governments? Might as well just burn all of your cash in an oil drum.
>unimaginable energy waste of mining cryptocurrencies
Not all cryptocurrencies require a massive amount of energy.
>Cryptocurrencies have existed for eleven years, they should have something to show for right now
I'm using a cryptocurrency for feeless, instant microtransactions in a browser based game. It happens to be a near ideal solution. That, said I won't force it upon anyone. It is a purely voluntary proposition.
>Ponzi
This is somewhat true. When there is no actual use case, there is no actual value. But again, the author generalizes. Not everyone is in it to promote some coin. Some of us are just looking for a technical solution.
Let's take a second to remember what happened with e-gold and liberty reserve. There's a reason why cryptocurrencies are necessary. They aren't backed by anything because they are decentralized. They can't be backed by the obvious (precious metals) because that is highly regulated.
>Those regular currencies provide tremendous value to our societies.
This is as far as I have time to go right now. If you think there's no issue with traditionally issued paper and digital money, then there's very little to say here. The US is about to issue $2 trillion in monetized debt.
From Roman coin clipping to the Wiemar republic's hyperinflation, if you can't see what is happening and actually believe that this process is 'adding value' to society...
If hamburgers were once 5 cents each, how has value been added?
> I'm using a cryptocurrency for feeless, instant microtransactions in a browser based game. It happens to be a near ideal solution. That, said I won't force it upon anyone. It is a purely voluntary proposition.
I think you just made the point of my article again for me, thanks ;)
The volatility of crypto just don't provide a real alternative to regular currencies though.
Not at all. It isn't criminal, nor does it use loads of electricity. It wouldn't be possible with Paypal or any other solution.
>The volatility of crypto just don't provide a real alternative to regular currencies though.
What's that have to do with the price of tea in China? I.e. if that's the best you can offer, you can't construe that cryptocurrency is a detriment to society...
Ah, yes. Argumentation by number of users. Reminds me of Facebook conclusively proving that federated social networks are dead end by its own merits, definitely not by the fact that when you start using social network you are more likely use one that your friends already use.
I was simply pointing out a fact, not looking to argue. You won't hear any support for centralized media - be they social networks or cryptocurrencies - out of me.
However, I'll also point out that when it comes to things which claim to be effective means of exchange, buy-in from users is pretty dang important.
If people didn't raise the "selling drugz" thing every time. Selling drugs should not be a crime anyway.
I don't like crypto currencies (and coffee is my drug of choice), but saying "drugs are bad mmkay" and "how are we going to pay the generous pensions to our public servants [while most of us are never going to be able to retire]" is almost an incentive to try Bitcoin once again.
If drugs are illegal, then that's the law. Fair or not, that's beside the point. If you don't like the law, feel free to lobby for changing it, but in case you're selling drugs illegally, then you should go to jail.
In general people breaking the law should incur the associated costs, especially when they are doing so knowingly.
People in general are detrimental to society, regardless of what currency we are using. Your argument is pretty weak considering conventional currency has been used for illegal and immoral activities since it was a thing, and even before that there were illegal trade in goods and services. All your examples in your arguments have been around long before cryptocurrency, with the exception of ransomware, which still was around prior to bitcoin, but i will grant you is much easier now. Nothing new really except a new payment method. It all comes down to the fact that there is a percentage of people out there that are not "good" people, with the definition of "good" relative to your perception of the situation. this will always be the case, regardless of technology. Cryptocurrency problems, are just a symptom of a greater problem which is human nature...which you cannot change.
Well you haven't really state any benefit of traditional currency either....it can be given, taken, lost, stolen...and given the current world situation it is certainly not stable.
Cryptocurrency has every benefit of normal currency for the user, less beneficial for law enforcement and governmental control, but control is not always a good thing either. Your talking about a currency....why does it have to perform something magical for it to be "good"
Cryptocurrency can facilitate crime just like cash, but with scale come new and unknown implications. Same with information security, surveillance, and more: physical vulnerability in a door lock vs. remotely exploitable vulnerability in Wi-Fi router firmware; standalone CCTV vs. a connected network of cameras with centralized storage that allows tracking the movements of a given person throughout the day—the latter cases inevitably create potential for less obvious, more insidious exploitation not restricted by physical barriers.
A friend of mine uses (used?) cryptocurrency for transferring/receiving money to/from a sibling across the ocean. Converting to/from local currency is apparently cheaper relative to PayPal rates. (Plus, in some countries PayPal et al. restrict accounts not associated with a bank, making it even less attractive to unbanked.)
What is unclear to me personally is whether benefits outweigh other implications, once everything gets amplified by scale.
I wouldn't be so confident. Making things illegal works pretty well in discouraging usage, and shutting down the "exchanges" like coinbase would tank the value for crypto, as most normies would no longer transfer surplus cash into bitcoins.
Of course no one can take those long numbers from those cold wallets.
Half way down the page and there are zero arguments in favour - deeply disingenuous article.
Much of what this "discussion" focuses on casts every innovation (of which there are many) into the Bitcoin Proof of Work pidgeon hole.
Bitcoin is a primitive protocol - nothing more than a technical proof that can now be used as a gold store.
There are some serious upcoming corporate monsters building their foundations right now.
Cardano, Chainlink, ETH(Maybe), Augur.
All of those are real companies not anarchist dreams.
Serious scientific minds like Philip Wadler, who has contributed majorly to Haskell and Java, this is not some libertarian dream.
It's telling that the theoretical justifications the crypto folks use is mostly warmed over goldbuggery, and therefore concerns about the effects on society at large are discounted. The appeal is to people who have no fucks to give about society at large.
I'm pro-crypto; but Proof-of-Work mining is an ecological atrocity. If it's infeasible to outright ban mining at scale, a sufficiently onerous carbon tax to disincentivize might be enough. In either case, miners would recoup their losses by selling ASICs, certainly to those in countries with no such restrictions, and the mining would continue. Maybe a government buyback program, similar to what countries have done with guns; but it seems difficult to summon that much political will.
Take a look at what Compute North is doing - reframe what an energy producer is.
Electric power plants will have the market cornered on computation cost, they will be the miners using surplus load, fluctuating with the market and generating tokenised wealth at the point of generation.
Tokens created at the point of value generation - not abstracted to a few interest rates and financial levers.
Why do you feel entitled to tell people what they should do? How do you know what value - or lack thereof - people get from using Bitcoin&co., have you checked with them, or is it just theory? Why do you assume your sense of value has to be universal?
The 'drugs' traded on the 'deeply depraved' marketplaces save lives and make other lives kind of comfortable even amid a chronic disease. Yes, I mean drugs which should, but for various reasons are not, available in the pharmacy. That's a real use case, do you think it's 'detrimental to society'? Because ill people get a chance to live again? Great thinking.
And to top it all off, your post is worded in a purposely confrontational and inflammatory way. It's a flame-bait, and it got flagged and removed from the site because of this. What do you gain by presenting a biased, unoriginal post to the crowd here? If you think you just made a "net benefit for society" - think again. In solitude, please.
Yes the title didn't help, a good lesson. Less judgement in titles.
You call my post bias and unoriginal, which you can do. But can you answer the core question I pose?
And please not with esoteric examples of availability of medicine for chronic diseases which to me raises the question: is that all you can come up with?
It's not esoteric! It happens. I can't go into details, which should be understandable, but I've seen this happen. People I know and love were able to live freely in the last year of their lives; people I know and love are able to function mostly normally because of the drugs they buy illegally. What, please tell me, is esoteric in this? What exactly?
> is that all you can come up with?
No, but it's enough to falsify your claims. There are people who get tremendous value out of the 'depraved markets'. That's it.
It doesn't falsify it. It only shows one or a few examples where just a few people self-report any benefit. And getting medicine through the dark markets is shady as fuck.
That kind of example doesn't seem to support the whole crytocurrency stuff with all it's downsides in any way.
If that's all you can come up with, all the more reason to shut it down (hypothetically).
And who other than the people is qualified to report whether people benefitted?
> And getting medicine through the dark markets is shady as fuck.
Are you a Christian? I'm amazed and ask seriously, because I can't imagine much of anything else that would make you spew this much of a nonsense with this much conviction.
dang, yes, I know, this is the last post from me, sorry.
IMO this argument is pretty seriously flawed. We tend to think of revolutionary technologies as "overnight successes" but that's rarely the case.
If we had abandoned the smartphone 11 years after the first attempt at, we would never have the iPhone. If we had abandoned combustion engines 11 years after their first attempt, we never would have had the automobile. New technology is hard and requires a lot of tinkering.
I also think the author fails to capture what people look to as the potential of crypto. While there is a definite subculture of neo-Austrian economics, a lot of us are also interested about the ability to structure new forms of digital markets, make money programmatic, and increase the structural privacy of the internet.