> Many of the companies are suffering because they kept a portion of their funds in digital assets
Lol that makes it sound like they had a choice. Because essentially none of the ICOs did KYC/AML, none of them were allowed to create bank accounts anywhere worldwide so they had to keep their money in ETH.
That’s why they’re just starting to go bankrupt and will mostly all go bankrupt in 2019. If you think it’s a bear market now, the real crash hasn’t even started yet.
If you want to see something typical, here is what Jez, the founder of FunFair, wrote one year ago on Reddit:
"in the august company announcement we said we were holding more than a year's running cost in cash and thats still the case. our holdings are approx $6m in cash (dollars), and several million in bitcoin (which keeps going up in value!) and a lot more in eth. in short, we have capital of more than $30m, at current valuations. we're not going to starve in 2019, unless bitcoin and eth values plummet which seems unlikely. bitcoin is more than double the price of the time of our token sale in june."
Definitely. When prices are going up up up and the money is flowing freely, few really question what economic value is being created. But now that it's obvious to even the fools that they can lose money, they're going to have to figure out what valuable service these companies can provide to regular folks.
When I contrast this with the end of Bubble 1.0, the biggest difference I see is the lack of actual use. 2000 was an incredible bear market, especially in tech. Even good startups died, and the ones who weren't creating value died quickly. The Internet, though, still had hundreds of millions of daily users. Things like email and the web browser and downloadable MP3s made people's lives better, and they weren't giving them up.
But who uses Bitcoin for anything but speculation and maybe some light financial crime? As best I can tell, approximately nobody. The NYT tried using it for daily life back in April and it was a bust. [1] The few major online retailers who offered to sell you things in it have removed it again. Even major Bitcoin proponents admitted it was terrible as a currency.[2] And as far as I can tell, none of the zillion other coins have significant real-world use either.
I think there's truly nothing to sustain an "industry" here. Valuations are going to drop to (and probably below) whatever can be justified by cash flows, which in turn is based on economic utility to people outside the bubble. If that number isn't zero, it's at least very, very small. So as you say, this is only the beginning of the end.
My previous company (AirFox) did an ico, we had a bank account, and we sold everything. We also did KYC/AML for all purchasers. Most of the USA firms did.
However, the SEC also just settled with AirFox for selling unregistered securities, so that didn’t exactly go as planned!
I'm not sure that's quite true. All the ones I'm familiar with had bank accounts to pay wages, rent etc. And they also seem to have been able to change crypto to fiat. I opened some fiat-crypto accounts and it wasn't that hard - you have to scan your passport etc.
They could have simply kept their assets in stable coins, like Dai, Tether, etc..They could also sell into USD on exchanges that allow you to trade USD (e.g. Kraken). Another option would have been to open a hedging short position on say, Bitmex. There's lots of ways they could have cashed out, effectively.
This is what efficient markets do according to theory: capital deployed in areas not as productive relative to another move to the more productive one. Wait or is that just crazy investors hoping to get into the next bubble? Either way good. All these alt-coin save-the-world businesses can go the way of the do-do, I still need tools to help make Ansible not suck and learning K8s and figuring out how to scale MySQL. I’d rather see money and talent go into making tools that are actually useful even more useful than creating self directed businesses etc.
It's a very good point. A lot of smart people jumped into an area that if I'm feeling very generous I would call "unproven". And I'm all for startups trying new things, but we could have learned just as much about the possible utility of cryptocurrencies with 100x less resources.
My main worry now is that some of the people will have been damaged by this. Some of the interest we can write off as irrational exuberance; hopefully some will have gotten their fingers usefully burned and will be more careful choosing what they work on next time. But a lot of the field was somewhere between chasing a bubble and outright scammy.
It reminds me of people I've seen burned by MLM schemes. Some say, "never again!" But some really buy into the get-rich-quick thinking and will keep on making the same mistake in different forms. "This time it will be different!" But it never is.
Regardless of what's happening this winter, there's still way too much money sloshing around in the crypto space, money that is being ineffectively allocated... It'll be another 5 years at a minimum before any of the markets in the crypto space will be anywhere near "efficient", in my estimation.
>Sirin Labs, for example, raised $158 million last year to create a mobile phone that allows consumers to trade and use crypto. The company, which will ship its first batch of a few thousand phones in December, is now considering abandoning hardware altogether and refocusing on shipping software for other phone makers to use, Chief Executive Moshe Hogeg said in an interview. Sirin now only has enough funds for six to 12 months of operations, he said.
Uh. Glad this bubble has popped. Of all the things I want in a phone, "trade and use crypto" isn't quite a requirement. Besides existing phones trade and use crypto quite well
I was watching something on youtube recently that brought back memories of the early days of the internet and the campaign to discredit it (it will bring smut directly into your home... it will be all over in 5 years..) and now I see HN users glee with the failure of fellow engineers and entrepreneurs and the same campaign (it's a scam, it will bring drugs directly into your home...).
The bear market has been brutal and some very good teams were caught off guard because they lack to experience and know-how to balance a treasury or keep a startup alive. Many of us here are also equally unqualified to succeed though.
In the aftermath of the 99 crash, Amazon shares were trading for a few dollars and so were many other companies that today are huge monopolies. I believe that many of the blockchain native companies that survive this crash likely have the same growth.
I think everyone can agree that cryptocurrency got way ahead of itself but HN almost seems Luddite in it's treatment of the underlying technology to the point that we are going to have our own "No wireless. Less space than a nomad. Lame." moment that people will link to for years to come.
The underlying technology is actually pretty worthwhile. Ethereum is providing a base layer protocol for apps that never go down, never fail, and are fully trusted. That's something that future generations will take for granted but HN is largely ignoring right now. Even Google goes down (sometimes once or twice a month). Take a moment to imagine a few of the things you could do better if you had 100% reliable hosting that was safe and private. And basically free. (Either the user pays a penny or two when using your app or you pay a penny or two for each user).
You wouldn't look at the internet in the early 90s and say it was useless because all it does is carry short messages on Usenet which take a while to appear. The tech was being improved. Those short pieces of messages evolved into images and then later video and now we have the internet of today. This isn't going to happen overnight but it's going to happen faster than the improvement of the internet since Ethereum is just software and no hardware needs to be rolled out.
Go ahead and ignore it right now. It's still building time. But don't assume it's useless or beanie babies. In a few years the layer 1 protocols will be good enough for something useful and I would bet that we see something truly unique come out of the blockchain space that we never before knew we needed.
> we are going to have our own "No wireless. Less space than a nomad. Lame." moment that people will link to for years to come.
That quote is a product of its time, and only seems foolish or misguided with the benefit of hindsight. There is no shame in skepticism, even if it ultimately ends up being incorrect (likewise I'd have no misgivings about making a wrong decision rationally). There is also an element of survivorship bias: many such quotes about things which did fail were wagered on similar amounts of information, but have since fallen into obscurity. I don't think it's fair to call the author of that quote a Luddite.
Speaking as someone well acquainted with the technicalities of distributed systems and cryptography, I am deeply skeptical of blockchain technology. I think the vast majority (but not all) of it is "lame"[1], for lack of a better word. I would happily accept being quoted for a decade or two if I'm wrong.
___________________________
1. I'm skeptical for reasons I'm not going to try to defend, because they've been rehashed on Hacker News over and over. The justifications will likely not convince anyone who remains unconvinced.
Disclaimer: I've co-founded a company building cryptographic protocols for existing cryptocurrencies. I'm also a cryptocurrency security researcher.
I believe in Bitcoin and the recent developments in both cryptography and distributed systems which are underlying many cryptocurrency projects. I think the skepticism of Hn is rational, valuable to the community and often correct. The cryptocurrency space is a great space to work in, but it requires a constant investment in skepticism and critical thought. I hope Hn always remains skeptical of technology.
> The underlying technology is actually pretty worthwhile. Ethereum is providing a base layer protocol for apps that never go down, never fail, and are fully trusted.
I disagree with this statement. Ethereum DApps can fail, Ethereum can be rendered unavailable via: scalability issues, forks, bugs or failures in the P2P network. Furthermore the additional infrastructure that many DApps rely on can fail as well. Ethereum is not a solution for achieving high-availability, high-availability is probably harder to achieve with a DApp. Ethereum is a solution for building and managing assets outside the control of a single party or company. This intentional loss of control comes with many costs and does not provide universal business benefits.
On a more serious note, I don't think the current generation of blockchains is "The Future". They offer basically nothing more than what you can achieve with a publicly hosted git repository with post-commit hooks that enforce signatures. Actually, Ethereum is far worse, because all computations are repeated by every node (as far as I know), which is a huge waste of energy. If you want reliable distributed computation, you need to make sure there's some way of smart distribution of work... e.g. offer exponentially diminishing returns for each "duplicated" evaluation of the same piece of code beyond the 2nd.
> Ethereum is providing a base layer protocol for apps that never go down, never fail, and are fully trusted.
Even if we were to grant that these claims are true, we still have to ask what classes of application benefit from slower, more expensive distributed systems. Blockchains solve only one problem, which is consensus formation on ontrusted networks. They do not solve politics, governance, downtime, and certainly not application failure.. these things all exist on blockchains.
Essentially none of the application ported from centralized systems to Ethereum or even Bitcoin actually face Byzantine consensus issues when deployed as centralized systems. Bitcoin can be used as a 24x7x365 global collateral and value transfer instrument - such a system would face consensus problems if implemented on top of traditional banking infrastructure. That's hugely valuable, but pretty much the only problem-solving application to date.
For things like asset ownership and transfer, any kind of voting, real estate, IPOs, etc, most people still have to deal with incredibly bad centralized systems, that would be amazing if rebuilt as centralized node.js apps that talk to a MySQL database. This stuff is low hanging fruit that's a huge pain for massive swathes of humanity. And despite the fact that no Palo Alto real estate broker is talking to the city's land deed system over unreliable networks, where enemy messengers might swoop in and assign your deed to the wrong buyer, there's this myth that we need distributed consensus for this and other problems best solved by... databases.
> HN almost seems Luddite in it's treatment of the underlying technology
HN dislikes the never ending and unsubstantiated breathless hype surrounding cryptocurrency, this is painfully obvious if you actually engage genuinely instead of pretending that everyone is an idiot because they don't fawn over what has amounted to a novel and interesting but mostly useless technology.
> No wireless. Less space than a nomad. Lame.
Using hindsight to cherry-pick historical examples of when naysayers were wrong is obviously terribly flawed logic yet it is a routinely common defense among cryptocurrency enthusiasts. It should be obvious to any engineer that this proves nothing and I personally take this reasoning as a sign that you might be arguing in bad faith.
> Ethereum is providing a base layer protocol for apps that never go down, never fail, and are fully trusted.
A base layer for apps that nobody cares about. Give one example of a useful Ethereum app. I define "useful" as a product or service that has demonstrated market success but is cheaper or somehow improved through cryptocurrency. I don't count it as useful if its a niche use-case that is impractical or has no market demand (e.g. avoiding taxes). Also, the idea that these systems never fail is laughably absurd as they have failed to the tune of multiple millions of dollars at this point (i.e. badly written code that failed to do what it claimed, resulting in funds being stolen).
> You wouldn't look at the internet in the early 90s and say it was useless because all it does is carry short messages
This absurd comparison of cryptocurrency to the early internet has been so thoroughly debunked that it barely merits a response. Please stop saying this.
> In a few years the layer 1 protocols will be good enough for something useful
Only in cryptocurrency software land is "in a few more years it might be useful" a defensible explanation of why cryptocurrency is the greatest innovation since the internet. Why can't you wait till its actually useful before broadcasting your condescendingly cliche cryptocurrency judgements regarding how HN is full of Luddites who are incapable of understanding technology? I'm sure cryptocurrency is just so complex and so new that todays engineers are just too dumb to understand it, it takes a special breed of elite hacker to fully grok the amazing potential of this new technology, Luddite software engineers be damned.
Hacker News' own "No wireless. Less space than a nomad. Lame." moment was when Dropbox was introduced:
> For a Linux user, you can already build such a system yourself quite trivially by getting an FTP account, mounting it locally with curlftpfs, and then using SVN or CVS on the mounted filesystem. From Windows or Mac, this FTP account could be accessed through built-in software.
We only remember those who ended up working. Remember color.com? Remember Theranos? There are probably hundreds of others in old HN posts we have long forgotten. Sometimes skepticism is warranted.
Instead of playing on our heartstrings to convince us that cryptocurrencies are useful, how about actually making something useful? We've been told for years that it was about to pay off, that "it's still building time". You've had billions poured in ICOs and pre-mined coins and you have nothing to show for it besides glorified pyramid schemes and currencies that are useless as currencies.
Comparing cryptocurrencies to the early internet is frankly absurd. Maybe people didn't imagine how huge is was going to become but the practical usefulness of being able to share data across the USA (and then the world) is obvious. Besides the Internet grew fast and was useful almost from day 1, even though it involved a complex and expensive hardware infrastructure. By the 90's the Internet wasn't mainstream but it was definitely very useful. Sci-fi writers had expected something like the Internet long before ARPA, it's just immediately obvious that being able to connect to the entire world in real time would be greatly valuable.
Furthermore what prevented a more mainstream adoption were mainly hardware limitations. Internet on dial-up wasn't fun at all. Remember having to wait for a full minute to have a progressive JPEG load up? I do. It was clunky but there was nothing else like it. Once technology improved and got faster and cheaper adoption exploded. What's slowing down progress in CryptoCurrency? The infrastructure is there, yet hardly anybody wants to use it. And unlike the Internet, there are plenty of alternatives for the vast majority of the services offered through a blockchain.
>I would bet that we see something truly unique come out of the blockchain space that we never before knew we needed.
> Ethereum is providing a base layer protocol for apps that never go down, never fail, and are fully trusted.
dapps nobody uses? ICO pump and dumps? you lost the crowd there Sir.
We are not luddites, I don't think you fully comprehend what that word means.
You are assuming blockchain right now, in it's current shape and form, a ReallSlowDatabase(tm), with no real Fortune 500 or the military using it to power their major operations, the so called ledger already exists in Datomic and now AWS, the alleged decentralized PoW tx verification process is bullshit, mining pools have centralized, every fucking meetup I go to I get people like you getting in my fucking face telling me why im a fucking idiot for not buying to their pump and dump schemes that SEC is looking into, it's litearlly the ultimate hyperereality-using social media accounts to shill and attack unbelievers for not HODL, blindly calling any piece of fact or reality as FUD or FakeNews(tm)
Shut the fuck up.
Seriously. We are not luddites, HN users range from NASA engineers to lawyers, who all exercise common sense and have seen this type of pump and dump of technological hype probably far far longer than most blockchain thumpers.
God. I don't care if dang bans me for this post, I just had to get this off my chest. A fucking cult has hijacked the internet.
> Ethereum is providing a base layer protocol for apps that never go down, never fail, and are fully trusted. That's something that future generations will take for granted but HN is largely ignoring right now.
The iPod was released at that point and you could hold it in your hands and see for yourself.
Can you give me some examples of real world applications of Ethereum's protocol that you think are being undercounted?
I recently looked for some using smart contracts but all I see is hype and a lot of VC/bitcoin money thrown at things that haven't been able to deliver and don't even need blockchain. I saw Dubai putting property records into a blockchain but not sure it has smart contracts. Perhaps something will come up in the future, but what does it have to do with excessive crypto-profit and hype money being put into startups that lack fundamentals? I am not saying experimentation is bad, but I felt like we were/are reaching dotcom pets.com levels of hype and mania.
If you ask me, HN mostly seems to be saying that the hype has been out of control over blockchain. I don't see people saying blockchain technology is lame or unreliable, do you? I have seen comparisons of bitcoin to tulip mania and ponzis, but that's not the same as discounting blockchain technologies.
I think the same arguments can be said about P2P during the file sharing era. File sharing was often used for sketchy purposes most of the time, like cryptocurrencies, and people argued the underlying technology (P2P) was the key breakthrough especially for legal applications. While there are some minor cases of using P2P these days, it really hasn't made the impact that was expected. I don't see why the same won't happen for blockchain and technology underlying cryptocurrencies.
Good riddance. Hopefully this will serve as a reality check for regular people who are tempted by the siren song of quick riches. Crypto never provided any real economic value, so this was bound to happen sooner or later. With a bit of luck crypto will stay dead this time. Fingers crossed.
Do you have any stats to back this up. While it seems like there is a boat load of stupid money washing around when you look at studies of coin distribution they tell another story.
Does this mean that the price of video cards will fall ? or RAM ? I had to buy a video card 2-3 months ago and the prices were so high with the only explanation being "the coin miners".
What's interesting is that even though the value of for example Ethereum is going down, the usage statistics seem to be much healthier, specifically transaction volume [1] and address growth [2].
Funny how companies can go bust after getting millions from these token sales. Quite clearly they weren't on Ramen Noodle start up mode. Okay offices need to be paid for as do staff but it is not like they had to buy raw materials, build steel foundries, invest in a distribution chain or anything else capital intensive.
If they had been promising to make regular products and didn't ship then there would be front page scandals and outrage on consumer rights TV shows. But nobody cares, cryptocurrency has become a dirty word, normal people reading cryptocurrency stories don't get past the headline as they know the story already.
It will probably take a few years before documentary film makers make sense of the shenanigans that has gone on. There are no good stories though, at least with the dot.com crash you could tell the story through the lens of a company that was there at the time for it to have storytelling value. Shame Tom Wolfe is no longer with us, the crypto experiment needs someone of his character to do the story justice.
The millions they got from token sales were demoninated in cryptocurrency. All of them trying to cash out at once and you see what happened. A run on the bank.
People here saying the underlying concept is worth a allot. I don’t see the use cases for a distributed consensus algorithm outside of coins. Even a distributed ledger shared by multiple companies is probably not useful compared to the status quo. You can always shove a square peg into a round hole, it could go in but is it making the situation better?
I keep asking for one cryptocurrency based application or service with a lot of users that is not directly related to cryptocurrency itself and that is not illegal.
I keep getting nil. I keep searching independently and getting nil.
The closest I've found is the Sia storage network but it's hard to set up and not competitive with cloud storage. If I want privacy I can just encrypt locally before using S3, Backblaze, etc. If I want redundancy I can use two cloud storage services in parallel.
Good. 99% of it was utter bullshit and any worthwhile research was getting drowned out.
Regardless of whether or not blockchian and cryptocurrencies end up being pivotal technologies in future, one positive fallout is that we are asking "how can we do this better" of some very traditional and established industries.
I’m sure I’ll get buried for this, but it’s a shame that as a whole, we’ve spent billions of dollars, created tons of carbon, and wasted untold man hours on this blockchain and digital coin fad. At least nobody can say the concept wasn’t fully explored.
In other words, lots of great tech available at a very good price. If anyone know of a company with a good crypto trading platform who are looking to sell don't hesitate sending them my way.
This was just the crypto version of the dotcom bubble. The webvans and pet.com mistakes needs to be done.
Next generation crypto startups will bring more value because the infrastructure is going to be much further. Give it a couple of years and we will start seeing companies build on top of blockchain rather than building blockchain companies.
The biggest takeaway for me is how important stability and deleveraging is. In the regular stock market such price action would more likely be thought of as crazy volatility rather than a bubble-crash situation. Before the sudden appreciation there was a lot of optimism at similar prices. If it never happened many of these companies wouldn't go bankrupt. Volatility killed them.
I have the feeling this thread will be interesting to read in 20 years. Not in the same we read Krugman's 1998 [paraphrase] "the internet is dumb" statement but instead from a post-truth post-hypernormalization world were capital and code are closely entwined. You can already partially see in this thread a technical community that would like to, but can not quite, separate their personal bottom line from some pseudo-scientific idea of right/wrong. I would guess 20 years from now that falsehood will have faded and this thread will look interestingly passé.
"I am sure if that happened a year ago, that wouldn’t be a problem at all, a year ago there was a lot of free money in the market. But in a bear market there’s a change."
Ends up it's hard to run a business when you no longer have 'free money'.
[+] [-] Alex3917|7 years ago|reply
Lol that makes it sound like they had a choice. Because essentially none of the ICOs did KYC/AML, none of them were allowed to create bank accounts anywhere worldwide so they had to keep their money in ETH.
That’s why they’re just starting to go bankrupt and will mostly all go bankrupt in 2019. If you think it’s a bear market now, the real crash hasn’t even started yet.
If you want to see something typical, here is what Jez, the founder of FunFair, wrote one year ago on Reddit:
"in the august company announcement we said we were holding more than a year's running cost in cash and thats still the case. our holdings are approx $6m in cash (dollars), and several million in bitcoin (which keeps going up in value!) and a lot more in eth. in short, we have capital of more than $30m, at current valuations. we're not going to starve in 2019, unless bitcoin and eth values plummet which seems unlikely. bitcoin is more than double the price of the time of our token sale in june."
[+] [-] wpietri|7 years ago|reply
When I contrast this with the end of Bubble 1.0, the biggest difference I see is the lack of actual use. 2000 was an incredible bear market, especially in tech. Even good startups died, and the ones who weren't creating value died quickly. The Internet, though, still had hundreds of millions of daily users. Things like email and the web browser and downloadable MP3s made people's lives better, and they weren't giving them up.
But who uses Bitcoin for anything but speculation and maybe some light financial crime? As best I can tell, approximately nobody. The NYT tried using it for daily life back in April and it was a bust. [1] The few major online retailers who offered to sell you things in it have removed it again. Even major Bitcoin proponents admitted it was terrible as a currency.[2] And as far as I can tell, none of the zillion other coins have significant real-world use either.
I think there's truly nothing to sustain an "industry" here. Valuations are going to drop to (and probably below) whatever can be justified by cash flows, which in turn is based on economic utility to people outside the bubble. If that number isn't zero, it's at least very, very small. So as you say, this is only the beginning of the end.
[1] https://www.nytimes.com/2018/04/16/nyregion/new-york-today-l...
[2] e.g., https://avc.com/2017/08/store-of-value-vs-payment-system/
[+] [-] seibelj|7 years ago|reply
However, the SEC also just settled with AirFox for selling unregistered securities, so that didn’t exactly go as planned!
[+] [-] philfrasty|7 years ago|reply
[+] [-] tim333|7 years ago|reply
[+] [-] DonHopkins|7 years ago|reply
[+] [-] darawk|7 years ago|reply
They could have simply kept their assets in stable coins, like Dai, Tether, etc..They could also sell into USD on exchanges that allow you to trade USD (e.g. Kraken). Another option would have been to open a hedging short position on say, Bitmex. There's lots of ways they could have cashed out, effectively.
[+] [-] gammateam|7 years ago|reply
[+] [-] gigatexal|7 years ago|reply
[+] [-] wpietri|7 years ago|reply
My main worry now is that some of the people will have been damaged by this. Some of the interest we can write off as irrational exuberance; hopefully some will have gotten their fingers usefully burned and will be more careful choosing what they work on next time. But a lot of the field was somewhere between chasing a bubble and outright scammy.
It reminds me of people I've seen burned by MLM schemes. Some say, "never again!" But some really buy into the get-rich-quick thinking and will keep on making the same mistake in different forms. "This time it will be different!" But it never is.
[+] [-] drcode|7 years ago|reply
[+] [-] ikeboy|7 years ago|reply
Uh. Glad this bubble has popped. Of all the things I want in a phone, "trade and use crypto" isn't quite a requirement. Besides existing phones trade and use crypto quite well
[+] [-] decentralised|7 years ago|reply
The bear market has been brutal and some very good teams were caught off guard because they lack to experience and know-how to balance a treasury or keep a startup alive. Many of us here are also equally unqualified to succeed though.
In the aftermath of the 99 crash, Amazon shares were trading for a few dollars and so were many other companies that today are huge monopolies. I believe that many of the blockchain native companies that survive this crash likely have the same growth.
[+] [-] Sargos|7 years ago|reply
The underlying technology is actually pretty worthwhile. Ethereum is providing a base layer protocol for apps that never go down, never fail, and are fully trusted. That's something that future generations will take for granted but HN is largely ignoring right now. Even Google goes down (sometimes once or twice a month). Take a moment to imagine a few of the things you could do better if you had 100% reliable hosting that was safe and private. And basically free. (Either the user pays a penny or two when using your app or you pay a penny or two for each user).
You wouldn't look at the internet in the early 90s and say it was useless because all it does is carry short messages on Usenet which take a while to appear. The tech was being improved. Those short pieces of messages evolved into images and then later video and now we have the internet of today. This isn't going to happen overnight but it's going to happen faster than the improvement of the internet since Ethereum is just software and no hardware needs to be rolled out.
Go ahead and ignore it right now. It's still building time. But don't assume it's useless or beanie babies. In a few years the layer 1 protocols will be good enough for something useful and I would bet that we see something truly unique come out of the blockchain space that we never before knew we needed.
[+] [-] throwawaymath|7 years ago|reply
That quote is a product of its time, and only seems foolish or misguided with the benefit of hindsight. There is no shame in skepticism, even if it ultimately ends up being incorrect (likewise I'd have no misgivings about making a wrong decision rationally). There is also an element of survivorship bias: many such quotes about things which did fail were wagered on similar amounts of information, but have since fallen into obscurity. I don't think it's fair to call the author of that quote a Luddite.
Speaking as someone well acquainted with the technicalities of distributed systems and cryptography, I am deeply skeptical of blockchain technology. I think the vast majority (but not all) of it is "lame"[1], for lack of a better word. I would happily accept being quoted for a decade or two if I'm wrong.
___________________________
1. I'm skeptical for reasons I'm not going to try to defend, because they've been rehashed on Hacker News over and over. The justifications will likely not convince anyone who remains unconvinced.
[+] [-] EthanHeilman|7 years ago|reply
I believe in Bitcoin and the recent developments in both cryptography and distributed systems which are underlying many cryptocurrency projects. I think the skepticism of Hn is rational, valuable to the community and often correct. The cryptocurrency space is a great space to work in, but it requires a constant investment in skepticism and critical thought. I hope Hn always remains skeptical of technology.
> The underlying technology is actually pretty worthwhile. Ethereum is providing a base layer protocol for apps that never go down, never fail, and are fully trusted.
I disagree with this statement. Ethereum DApps can fail, Ethereum can be rendered unavailable via: scalability issues, forks, bugs or failures in the P2P network. Furthermore the additional infrastructure that many DApps rely on can fail as well. Ethereum is not a solution for achieving high-availability, high-availability is probably harder to achieve with a DApp. Ethereum is a solution for building and managing assets outside the control of a single party or company. This intentional loss of control comes with many costs and does not provide universal business benefits.
[+] [-] tomp|7 years ago|reply
Haha you're funny.
On a more serious note, I don't think the current generation of blockchains is "The Future". They offer basically nothing more than what you can achieve with a publicly hosted git repository with post-commit hooks that enforce signatures. Actually, Ethereum is far worse, because all computations are repeated by every node (as far as I know), which is a huge waste of energy. If you want reliable distributed computation, you need to make sure there's some way of smart distribution of work... e.g. offer exponentially diminishing returns for each "duplicated" evaluation of the same piece of code beyond the 2nd.
[+] [-] skyraider|7 years ago|reply
Even if we were to grant that these claims are true, we still have to ask what classes of application benefit from slower, more expensive distributed systems. Blockchains solve only one problem, which is consensus formation on ontrusted networks. They do not solve politics, governance, downtime, and certainly not application failure.. these things all exist on blockchains.
Essentially none of the application ported from centralized systems to Ethereum or even Bitcoin actually face Byzantine consensus issues when deployed as centralized systems. Bitcoin can be used as a 24x7x365 global collateral and value transfer instrument - such a system would face consensus problems if implemented on top of traditional banking infrastructure. That's hugely valuable, but pretty much the only problem-solving application to date.
For things like asset ownership and transfer, any kind of voting, real estate, IPOs, etc, most people still have to deal with incredibly bad centralized systems, that would be amazing if rebuilt as centralized node.js apps that talk to a MySQL database. This stuff is low hanging fruit that's a huge pain for massive swathes of humanity. And despite the fact that no Palo Alto real estate broker is talking to the city's land deed system over unreliable networks, where enemy messengers might swoop in and assign your deed to the wrong buyer, there's this myth that we need distributed consensus for this and other problems best solved by... databases.
[+] [-] root_axis|7 years ago|reply
HN dislikes the never ending and unsubstantiated breathless hype surrounding cryptocurrency, this is painfully obvious if you actually engage genuinely instead of pretending that everyone is an idiot because they don't fawn over what has amounted to a novel and interesting but mostly useless technology.
> No wireless. Less space than a nomad. Lame.
Using hindsight to cherry-pick historical examples of when naysayers were wrong is obviously terribly flawed logic yet it is a routinely common defense among cryptocurrency enthusiasts. It should be obvious to any engineer that this proves nothing and I personally take this reasoning as a sign that you might be arguing in bad faith.
> Ethereum is providing a base layer protocol for apps that never go down, never fail, and are fully trusted.
A base layer for apps that nobody cares about. Give one example of a useful Ethereum app. I define "useful" as a product or service that has demonstrated market success but is cheaper or somehow improved through cryptocurrency. I don't count it as useful if its a niche use-case that is impractical or has no market demand (e.g. avoiding taxes). Also, the idea that these systems never fail is laughably absurd as they have failed to the tune of multiple millions of dollars at this point (i.e. badly written code that failed to do what it claimed, resulting in funds being stolen).
> You wouldn't look at the internet in the early 90s and say it was useless because all it does is carry short messages
This absurd comparison of cryptocurrency to the early internet has been so thoroughly debunked that it barely merits a response. Please stop saying this.
> In a few years the layer 1 protocols will be good enough for something useful
Only in cryptocurrency software land is "in a few more years it might be useful" a defensible explanation of why cryptocurrency is the greatest innovation since the internet. Why can't you wait till its actually useful before broadcasting your condescendingly cliche cryptocurrency judgements regarding how HN is full of Luddites who are incapable of understanding technology? I'm sure cryptocurrency is just so complex and so new that todays engineers are just too dumb to understand it, it takes a special breed of elite hacker to fully grok the amazing potential of this new technology, Luddite software engineers be damned.
[+] [-] sorenjan|7 years ago|reply
> For a Linux user, you can already build such a system yourself quite trivially by getting an FTP account, mounting it locally with curlftpfs, and then using SVN or CVS on the mounted filesystem. From Windows or Mac, this FTP account could be accessed through built-in software.
https://news.ycombinator.com/item?id=9224
[+] [-] simias|7 years ago|reply
Instead of playing on our heartstrings to convince us that cryptocurrencies are useful, how about actually making something useful? We've been told for years that it was about to pay off, that "it's still building time". You've had billions poured in ICOs and pre-mined coins and you have nothing to show for it besides glorified pyramid schemes and currencies that are useless as currencies.
Comparing cryptocurrencies to the early internet is frankly absurd. Maybe people didn't imagine how huge is was going to become but the practical usefulness of being able to share data across the USA (and then the world) is obvious. Besides the Internet grew fast and was useful almost from day 1, even though it involved a complex and expensive hardware infrastructure. By the 90's the Internet wasn't mainstream but it was definitely very useful. Sci-fi writers had expected something like the Internet long before ARPA, it's just immediately obvious that being able to connect to the entire world in real time would be greatly valuable.
Furthermore what prevented a more mainstream adoption were mainly hardware limitations. Internet on dial-up wasn't fun at all. Remember having to wait for a full minute to have a progressive JPEG load up? I do. It was clunky but there was nothing else like it. Once technology improved and got faster and cheaper adoption exploded. What's slowing down progress in CryptoCurrency? The infrastructure is there, yet hardly anybody wants to use it. And unlike the Internet, there are plenty of alternatives for the vast majority of the services offered through a blockchain.
>I would bet that we see something truly unique come out of the blockchain space that we never before knew we needed.
That's faith, not reason.
[+] [-] ziont|7 years ago|reply
dapps nobody uses? ICO pump and dumps? you lost the crowd there Sir.
We are not luddites, I don't think you fully comprehend what that word means.
You are assuming blockchain right now, in it's current shape and form, a ReallSlowDatabase(tm), with no real Fortune 500 or the military using it to power their major operations, the so called ledger already exists in Datomic and now AWS, the alleged decentralized PoW tx verification process is bullshit, mining pools have centralized, every fucking meetup I go to I get people like you getting in my fucking face telling me why im a fucking idiot for not buying to their pump and dump schemes that SEC is looking into, it's litearlly the ultimate hyperereality-using social media accounts to shill and attack unbelievers for not HODL, blindly calling any piece of fact or reality as FUD or FakeNews(tm)
Shut the fuck up.
Seriously. We are not luddites, HN users range from NASA engineers to lawyers, who all exercise common sense and have seen this type of pump and dump of technological hype probably far far longer than most blockchain thumpers.
God. I don't care if dang bans me for this post, I just had to get this off my chest. A fucking cult has hijacked the internet.
[+] [-] belltaco|7 years ago|reply
The iPod was released at that point and you could hold it in your hands and see for yourself.
Can you give me some examples of real world applications of Ethereum's protocol that you think are being undercounted?
I recently looked for some using smart contracts but all I see is hype and a lot of VC/bitcoin money thrown at things that haven't been able to deliver and don't even need blockchain. I saw Dubai putting property records into a blockchain but not sure it has smart contracts. Perhaps something will come up in the future, but what does it have to do with excessive crypto-profit and hype money being put into startups that lack fundamentals? I am not saying experimentation is bad, but I felt like we were/are reaching dotcom pets.com levels of hype and mania.
If you ask me, HN mostly seems to be saying that the hype has been out of control over blockchain. I don't see people saying blockchain technology is lame or unreliable, do you? I have seen comparisons of bitcoin to tulip mania and ponzis, but that's not the same as discounting blockchain technologies.
[+] [-] tialaramex|7 years ago|reply
They laughed at Columbus, they laughed at Fulton, they laughed at the Wright brothers. But they also laughed at Bozo the Clown. -- Carl Sagan
[+] [-] lazyjeff|7 years ago|reply
[+] [-] gizmo|7 years ago|reply
[+] [-] andrewmutz|7 years ago|reply
Most of the money wiped out during the last few years is not coming from wealthy “smart money” investors.
The money has come from the middle class and mom and pop investors.
[+] [-] lordnacho|7 years ago|reply
When something goes well but mom and pop are excluded, the rich get richer.
[+] [-] pmorici|7 years ago|reply
[+] [-] ikeboy|7 years ago|reply
Lottery winners are not known for their wise investments.
[+] [-] rco8786|7 years ago|reply
[+] [-] test1999|7 years ago|reply
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[+] [-] gammateam|7 years ago|reply
And now even more of it is sold to institutional who dont have bills to pay
Next!
[+] [-] leaveyou|7 years ago|reply
[+] [-] ryuuseijin|7 years ago|reply
[0] https://etherscan.io/charts
[1] https://etherscan.io/chart/tx
[2] https://etherscan.io/chart/address
[+] [-] Theodores|7 years ago|reply
If they had been promising to make regular products and didn't ship then there would be front page scandals and outrage on consumer rights TV shows. But nobody cares, cryptocurrency has become a dirty word, normal people reading cryptocurrency stories don't get past the headline as they know the story already.
It will probably take a few years before documentary film makers make sense of the shenanigans that has gone on. There are no good stories though, at least with the dot.com crash you could tell the story through the lens of a company that was there at the time for it to have storytelling value. Shame Tom Wolfe is no longer with us, the crypto experiment needs someone of his character to do the story justice.
[+] [-] empath75|7 years ago|reply
[+] [-] jarym|7 years ago|reply
Good luck building software, testing it, writing documentation, producing a go to market strategy and executing it without a lot of capital.
[+] [-] ErikAugust|7 years ago|reply
[+] [-] yalogin|7 years ago|reply
[+] [-] api|7 years ago|reply
I keep getting nil. I keep searching independently and getting nil.
The closest I've found is the Sia storage network but it's hard to set up and not competitive with cloud storage. If I want privacy I can just encrypt locally before using S3, Backblaze, etc. If I want redundancy I can use two cloud storage services in parallel.
[+] [-] verroq|7 years ago|reply
[+] [-] strayamaaate|7 years ago|reply
Regardless of whether or not blockchian and cryptocurrencies end up being pivotal technologies in future, one positive fallout is that we are asking "how can we do this better" of some very traditional and established industries.
[+] [-] abootstrapper|7 years ago|reply
[+] [-] ThomPete|7 years ago|reply
This was just the crypto version of the dotcom bubble. The webvans and pet.com mistakes needs to be done.
Next generation crypto startups will bring more value because the infrastructure is going to be much further. Give it a couple of years and we will start seeing companies build on top of blockchain rather than building blockchain companies.
[+] [-] jjtheblunt|7 years ago|reply
[+] [-] unknown|7 years ago|reply
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[+] [-] thetricia|7 years ago|reply
[+] [-] vongesell|7 years ago|reply
1. web.archive.org/web/19980610100009/www.redherring.com/mag/issue55/economics.html
[+] [-] kayhi|7 years ago|reply
Ends up it's hard to run a business when you no longer have 'free money'.