[poof131]

A few months ago I agreed with her entirely. Tether is an unbacked fraud and NFTs are being front-run [1, 2]. The mid-level marketing Ponzi vibe is crazy. The latency of applications on the blockchain is atrocious. But more recently after learning from and interacting with people building in the space my assessment changed. There is an interesting intersection between tech, communities, and economics. There exists a transparency in the open-source code of smart contracts that will disrupt the current gatekeepers like the internet did.

Certainly, there are problems, but some things will live beyond the crash that is coming and change things in ways no one can be sure of. The internet started in the 1960s and was opened up commercially in 1989.[3] It feels like we are somewhere between 1995 and 2000. The energy feels similar with people trying to shove old paradigms into a new world, vaporware companies, and insane investments. I don’t think we’ve seen the top and it will likely make the crash of 2001 look small by comparison. I may be wrong, but if I’m not, it still is early.

[1] https://bitfinexed.medium.com/tether-is-setting-a-new-standa... [2] https://twitter.com/Foone/status/1457749433844568066 [3] https://en.wikipedia.org/wiki/History_of_the_Internet

[saalweachter]

I'm sorry, I'm not trying to call you out personally, but this is itching my brain something fierce so I have to blurt it out, and hey, it's the internet. A little derailing never hurt anyone.

It's amazing to me how universal the "I used to be a non-believer" line is in evangelism. From the classic "I used to be an atheist but I've been born again" to all the members of political party A claiming to have been a member of party B before seeing the light to technological evangelism.

It just jumps out at you after awhile.

[mw888]

That’s a nice little Kafka trap you’ve constructed to disregard the people who change their minds away from what you think. So every time someone changes their mind and uses their previous opinion as informative you are going to non-committally imply it’s “evangelism?”

[throwaway98700k]

It’s a dangerous attitude because it has a paternal edge to it. Any “enlightenment” naturally leads to seeing others as unenlightened.

[mahogany]

Alternatively, what if they simply learned something new which caused them to change their belief in something? It's better to focus on what caused their mind to be changed (it may or may not be bunk) versus focusing on the fact that their mind changed at all (which can certainly be a good thing).

[mattdesl]

it goes both ways – "I used to be religious, now I am an atheist"

(I was also against crypto/blockchains when I first learned about them last year)

[tomxor]

The parent's perspective does not come across as an evangelist's though. Quite the opposite. It's balanced, seeing the hype for hype, seeing the flaws, and yet seeing that there is still some truth and potential buried in there. The world is grey.

[lumost]

You know, it's funny. I've worked in and around analytics for a long time now, and I've had the thought that blockchain enables the following.

1) A common "universal" transaction data source

2) A shared, readable format

So the thought occurred to me that as soon as blockchain apps/currencies became popular, people would want analytics on them. There would thus be a startup opportunity for unprecedented analytics visibility into transactional data from a third party without needing to build bespoke integrations into high security/compliance systems.

If a blockchain backed currency was widely used, a third party could easily estimate the real-time sales flow of every brick and mortar store location. You could have real-time auditing and quarterly tracking of both public and private corporations available from a third party. Asset transfers, smart contracts, and their real world equivalents could be instantly monitored - allowing the early detection of emergent supply chain bottlenecks.

The problem with all of this is that in the 5 years since I had this idea, the only use cases for BTC and other cryptos has been price speculation. The market for such analytics products is effectively zero.

[big_youth]

Blockchain analytics are a big sector. Companies like Coinbase and Binance have spent billions acquiring blockchain analytics firms.

Additionally, I think there is big money in selling blockchain analytics to governments for the money laundering, darknet markets, and fraud sector.

https://www.coindesk.com/markets/2019/02/19/coinbase-acquire...

https://www.coindesk.com/business/2021/04/30/coinbase-to-acq...

https://www.cnbc.com/2021/09/09/mastercard-to-buy-blockchain...

https://www.coindesk.com/markets/2019/12/03/binance-acquires...

[floodyberry-]

There is no future in third party analytics because any "blockchain" that is globally adopted and used for more than shitcoin speculation will be zero knowledge

[ptx]

Making all their real-time sales data public, and thus available to their competitors, doesn't seem like something most companies would want.

If the blockchain does enable this, wouldn't that just lead either to 1) companies not adopting blockchain, or 2) some solution for hiding the data and defeating third-party analytics?

[jcbrand]

You were right, blockchain analytics was a great startup opportunity and there are already a bunch of companies, like Glassnode, doing blockchain analytics.

You also seem to be missing a lot of interesting stuff happening with cryptos if you think it's exclusively price speculation.

[crehn]

> There exists a transparency in the open-source code of smart contracts that will disrupt the current gatekeepers like the internet did.

Could you elaborate which gatekeepers it will disrupt?

[unityByFreedom]

IMO social media needs competition but I don't think it will be disrupted by blockchain or decentralization. It will be disrupted by a continued pursuit of competition by doing things like supporting net neutrality. That keeps the playing field level and prevents current big players from becoming further entrenched. Big tech's monopolies are encouraged by lower-level-monopolies owned by Comcast and the other internet media conglomerates. To solve the problems higher in the tree we should get at the roots.

[tim333]

It is somewhat disruptive to banks. You can invest stable coins and get interest for example which is higher than bank interest. And the operator doesn't need to spend a fortune applying for banking licenses for each country they operate in.

[olalonde]

> A few months ago I agreed with her entirely. Tether is an unbacked fraud and NFTs are being front-run [1, 2]. The mid-level marketing Ponzi vibe is crazy. The latency of applications on the blockchain is atrocious. But more recently after learning from and interacting with people building in the space my assessment changed.

I feel like a lot of the cryptocurrency critics commit the "fallacy fallacy". That is, they have the following reasoning: people believe crypto is good because of X, X is false, therefore crypto is not good.

Yes, there are a lot of people who are into crypto because they think it's a way to get rich quick. Yes, there are a lot of guru technical analysts who sell bullshit dreams on their Youtube channels. Yes, there are a lot of criminals who use cryptocurrency. Yes, crypto attracts a lot of charlatans and snake oil men. Yes, there are a lot unbacked stablecoins and shitcoins.

Given the above, it's easy to dismiss all cryptocurrencies as a scam. But when you dig a bit deeper, you'll find that there is true technical and financial innovation. For me, Bitcoin's potential to be a programmable money without government or central authority is a very powerful idea. The idea that you can be your own bank and do p2p electronic money transfers without an intermediary. That has never been possible before.

I could go on but my point is that even if there are many wrong reasons people like X, it doesn't necessarily mean that X is wrong/bad.

[nly]

Everyone doing P2P transfer and bypassing traditional banking institutions is a powerful idea... but ultimately everyone needs to agree on a single medium of exchange, otherwise efficient market pricing is too hard.

And it's debatable whether fiat will ever whither and die. The Government will ultimately have to endorse a currency for tax purposes, and they'll always seek to control the inflationary environment so they can maintain a workable budget and keep public services afloat.

Just a century ago or so, banking was only for large corporations. Commoners and small businesses all used cash and exchanging bits of valuable metal was the norm. I mean, believe it or not, we had good reasons to abandon that simpler system in the first place. Things are better now. Markets are more efficient.

[gitfan86]

No one should be suggesting that 100% of crypto is a scam and that there will never be anything useful in the crypto space. Vitalik seems the be operating with best of intentions and IMO the threat of decentralized money has already effected the central banks in their thoughts around inflation.

My main problem is similar to the original article here. In 2014 Bitcoin was "The future of micropayments" 6 years later and now the narrative is that "Layer 2 networks are the future" It would be great if the crypto people could stop talking about how great the future will be and just deliver what they are promising

[slg]

>But when you dig a bit deeper, you'll find that there is true technical and financial innovation.

I will give you the technical innovation, but I really have not found anything financially innovative about cryptocurrency. What does crypto do that traditional currencies or payments systems don't? The only thing I see is that it largely replaces the old financial elite with a new financial elite and maybe under the right circumstances reduces fees for transferring money. That seems to be it unless you count circumventing financial regulation as a financial innovation.

[WA]

Nah, it’s like this: people believe crypto is good because of X, Y, Z, A, B and C. All of them are false, except for C in some odd circumstances. Therefore, the current state of crypto is not good.

[dmitriid]

> But when you dig a bit deeper, you'll find that there is true technical and financial innovation.

Ah yes. The good old "just google it". There's literally not a single "dig deeper" resource on the internet that explains the need for blockchains/cryptocurrencies etc.

But sure, there are a lot of "innovations" with recursive circular "innovations" (like currency speculation, HFT and flash loans, all of "innovatively made available" by regurgutating the same fatasy tokens and pretending they are worth something)

[benreesman]

I have wondered for awhile why the crypto mega-whales in my vicinity are trading USDT at par or better over the last year or two.

My conspiracy theory is that when insiders trade a distressed asset at par or better it’s often a bailout expectation that’s really being traded.

Who has unimaginable access to financing, a “stablecoin” going so/so, and a primary line of business critically dependent on Tether, like, I don’t know, a massive exchange with the highest volume pairs all sharing USDT as quote?

[oneoff786]

It’s not that hard. When Bitcoin goes down, people like tether because it’s “safe” at $1. So bitfinex makes more tethers and trades them for bitcoins. When Bitcoin goes up, bitfinex sells the Bitcoin and gets dollars.

It’s fractional reserve banking swapped around, with no reserve requirements. The market is the bank.

And because bitfinex is not obligated to redeems tokens for $1 they have no risk. It’s in their interest to keep the market price at $1 because the longer it runs the more money they make but if there’s a run on the currency they can just shrug and go home with their bag of dollars.

[tim333]

The price of things like USDT are effectively set by Tether rather than the free market. If Tether have billions of US$ and offer in the market to buy back USDT at 1:1 then that's what they price will be near enough.

[bb88]

What you've described is metastasized moral risk. We could argue that maybe some risk should be rewarded. But not all risk, such as spending billions in beanie babies as a corporate strategy.

[delaaxe]

I mean Binance has BUSD no?

[dmitriid]

> There exists a transparency in the open-source code of smart contracts that will disrupt the current gatekeepers like the internet did

Ah yes. How can we forget the community-audited and vetted smart contracts that ended up draining its users' wallets of all their money. Transparency!

[sabhiram]

Well, as opposed to hearing "oops our black box implementation of your information got hacked", I honestly don't mind the trend of "read the contract, it is code". Sure it can be misleading, sure it can be intended to trick someone. However, code is law, and even backdoors are "code". Instead we should fix the backdoors so that code can be reasonable "law".

[somebodythere]

Every time a nascent technology bubble crashes (dot com, AI winter, crypto...) speculation gets reset, scams and projects with no future get wiped out, and the space gets healthier.

[TomSwirly]

And yet you still don't name any actual useful applications!

The Ethereum world computer has 300,000 nodes, and yet has 1/5000 the computation power of a single Raspberry Pi 4.

Except for actual cryptocurrencies, all the "web3" applications could use boring old 1980s vintage cryptography, be just as distributed, and run ten thousand times faster and cheaper.

----

So far the only way anyone has ever made any money from cryptocurrency is to sell it to someone for more fiat currency. In fact, in real terms, it has net lost money because of the huge amounts of electricity expended.

So once people such as yourself purchase cryptocurrency, they know in their hearts that the only way they will make more is if further people buy into their Ponzi scheme.

Therefore, your comment above.

[doktorhladnjak]

The big question in my mind: is this the internet in 1997 or expert systems in 1982? It could be the next big thing. Or it could be an interesting idea that was oversold and overhyped, that never really disappeared but became irrelevant as its real value became a commodity that found its way into the software of established companies.

[samhw]

The worrying thing (for me) isn’t which one it is. The worrying thing is that so many people seem incapable of even making a creditable attempt at answering that question and analysing its fundamentals. This has opened my eyes to how many people only think through the prism of “well, this has got really popular lately, and the internet did that too, so this will be the next big thing even if I don’t know why!”. Survivorship bias is very very real.

[CRConrad]

> is this the internet in 1997 or expert systems in 1982? It could be the next big thing. Or it could be an interesting idea that was oversold and overhyped

...and then returned a few decades later to be oversold and overhyped some more, this time as "Deep Learning" or "AI".

Seems the alternatives on offer are scam or scam. (Or scam, scam, scam, ham, eggs, and scam.)

[tim333]

A nitpick is that [2] isn't front running. Front running is where you figure an institution is going to buy lots of some stock and get a buy order of your own in first, typically done by brokers.

Making fake trades to make the price look like it's going up can be called market manipulation in this case I think. This is also called painting the tape. A similar but slightly different scheme is wash trading where you basically sell an asset to yourself to make it look like that's the price and that there is trading volume going on. There's a lot of this kind of thing going on with NFTs.