"transaction reversibility is not about the ledger, but rather about the transaction rules that a currency uses. A reversible currency requires that someone anoint this trusted party (or trusted parties) and that they use their powers to freeze/burn/transact currency in ways that are at odds with the recorded owners’ intentions. And indeed, this is a capability that many tokens now possess"
I think this is arguing that reversibility is not antithetical to permissionless blockchains, because reversibility can be implemented on top of permissionless blockchains.
But that doesn't answer the critique -- the critique is that most real world systems do need trusted parties, and if you build a system of trusted parties on top of a permissionless blockchain, then you could have saved a lot of complexity, risk, and proof-of-economic-waste burn by building on top of a permissioned distributed ledger instead. Reversibility is one example of a design requirement that undoes the claimed advantages of permissionless blockchains that are meant to justify their inherent downsides.
Transaction irreversability is the whole point of the "peer to peer electronic cash system": "Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments... cutting off the possibility for small casual transactions ... What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party. Transactions that are computationally impractical to reverse would protect sellers from fraud" from the opening lines of the Bitcoin white paper.
So Bitcoin was designed for micropayments, and irreversability is a feature to reduce the friction. That is fine because it was intended for "small casual transactions" which very few people are going to invest the time and effort into disputing. It even looked like it might be successful as a micropayment system at first, given small Bitcoin transactions were initially processed without any transaction fees.
The problem is that it has clearly failed as a "peer to peer electronic cash system". It is now used primarily for large transactions, which you absolutely do need consumer protections for if you are a legitimate user (indeed the fact that there aren't consumer protections has made the space so popular with fraudsters, scammers etc.). And as others have commented, the newer cryptocurrencies which attempt to offer such protections end up being worse in every conceivable way from the traditional solutions. Leading back to the original article - is there any legitimate point to cryptocurrencies nowadays?
Many real world systems are "nearly trustless". Of course you still need some sort of court system if someone decides to break bad. But in the 99%+ of times you're in the happy path, economic transactions occur based on autonomous rules encoded in software.
The analogy I like to use is what's harder to buy a $1 million house or $1 million of Microsoft stock? The former process takes weeks, and dozens of man hours from lawyers, realtors, escrow agents, bankers, county property registrars, etc. Whereas a buy order to execute Microsoft shares happens in microseconds. That's because we've built a highly streamlined autonomous system for executing stock transactions. Yes of course, there's a trusted layer built on courts and fiat law at the bottom. And occasionally for a corner case, real lawyers have to get involved. But the vast majority of the time, this layer is completely abstracted away and trading stocks are just bits flipped on a computer.
When somebody says something like "let's put houses on the blockchain", the idea isn't to get rid of the fiat law system completely. At the end of the day, you still need courts and sheriffs to enforce property rights. But the idea is that we can wrap the house in an LLC, whose bylaws state that it's governed by on-chain contracts. (Which Delaware Chancery courts will absolutely recognize and enforce.)
Now instead of directly transacting at the very low-tech county property registrar we can transact using an on-chain NFT that grants the equivalent of ownership rights to the house. (This is very analogous to how Cede & Co technically owns almost all the stock shares in America, and holds them under your name for you.)
That NFT is way more powerful and efficient to transact with than the county property record. It lives on a credibly neutral level that already has billions in native capital and liquidity and exposes a fully Turing complete smart contract system. You can sell your house atomically and instantly to anyone in the world with no lawyers or escrow agents. You can pledge it as collateral and borrow against it. You can fractionalize it and sell a portion. Or roll it into a larger portfolio and slice into tranches. All with no more than few dozen lines of code. Without blockchains all of those operations would take hundreds of pages of legal documents and weeks of back and forth.
And it is fine to build systems with trusted parties on top of a permissionless network. The article cites USDC which does this, it is one of many applications users can choose to transact with. Attempting to bake reversibility into the protocol would lead to a tightly permissioned system with only a few trusted authorities.
A loose analogy might be the internet, which aims to be a decentralized global protocol that we can then build centralized systems on top of.
Bitcoin is a base-layer solution. Do you not want to transact on the base layer because of lack of reversibility or fees? Move to a higher layer solution that sacrifices some characteristic of Bitcoin to enable something new. Want to do lots of (micro)transactions? Use LN where this is made possible by sacrificing the ability to be secure offline.
Do you want to use DeFi-like solutions with smart contracts? Use RSK.
I don't see what the problem is with moving things up one layer if you retain the option to delve back into the base layer.
The argument made was that it's not about the technology itself but the transaction rules. If money are stolen from banks in a specific way (withdrawn into prepaid cards), banks will not and cannot reverse these transactions. Banks do have some rules like chargeback however to reverse legitimate transactions or delayed transactions. The same rules can be converted into Smart Contracts which governs the transaction of a certain currency.
So instead of reversing, we could make all NFTs locked from trading for 3 days after transaction which anyone could appeal for a dispute and buyback the NFT for the same price anytime.
The challenge here is, can we actually come up a set of robust rules that is not too rigid yet not abusable. It's not easy, it won't be right off the bat and it certainly require a lot of critical, innovative thinking. And maybe the solution won't have to be complex at all.
This article doesn’t address the main objection I have about the practical value of cryptocurrency, namely, why I can’t take such an application, replace the distributed ledger with a SQL database, and get a solution that’s better in every way.
As soon as you have a trusted central authority (monitoring and reversing payment transactions, interacting with government agencies to execute real estate transaction, etc.) I’m lost on why you need a blockchain.
Anyone notice how the author goes to great lengths to 'bold' the claims in the original letter that talk about how worthless the technology is - and then fails entirely to address those points?
Letter: "Crypo rests on tech that is useless."
Blogger: "I disagree, I think there are some fascinating things to be done with blockchain tech! Just... don't expect me to share them. You should DYOR."
Yeah, this is the classic playbook of hype vendors. The bigger the claim, the less specific, the better, because specifics can be settled one way or another.
IMHO Matthew Green often makes bold yet unsubstantiated claims. He also creates and promotes FUD. He may be technically good, but I don't trust his personal opinion, not even on subjects he presumably knows very well.
> In other words, transaction reversibility is not about the ledger, but rather about the transaction rules that a currency uses. A reversible currency requires that someone anoint this trusted party (or trusted parties) and that they use their powers to freeze/burn/transact currency in ways that are at odds with the recorded owners’ intentions.
once you have a trusted third party, though, you no longer need permissionless blockchains and PoW/PoS. that also eliminates the need to "mine" and the environmental concerns. of course it also eliminates the get-rich-quick schemes as well. you wind up with VISA running on top of a permissioned DLT.
> "The top credit-card merchant fee actually rose in the United States between 1991 and 2009, and this is a goddamn tragedy, since these fees are baked into the cost of most retail goods and thus born by the working poor (who pay them even if they use cash.) . . . Why are these IT-focused industries so consistently immune to the same technological improvements and cost reductions we see everywhere else?"
The simplest apparent answer is that this (the provision of payment services) is not a competitive market and as small retailers have nowhere else to turn, they're forced to pay high rents to what would have been called a trust in late 19th century Gilded Age terminology.
The solution is also fairly clear: if you have what's called a 'natural monopoly' then it should be state-owned and state-managed (see the network of roads, water pipes, etc.), and if it's not actually a natural monopoly - meaning a system where competition doesn't make sense, i.e. having multiple networks of privately owned roads is silly - then you need anti-trust actions by the government to foster competition in the industry, which would reduce fees and costs for merchants.
Arguably, if consumers had to pay the cost of transactions, rather than merchants, you might seem a lot more political pressure to make credit/debit card transactions the same cost as cash transaction, i.e. no added cost.
Cash is a government-supplied taxpayer-supported service supplied free of charge for merchants and customers, so perhaps that's the best option for the credit/debit interface as well. Of course, this would allow government to track everyone's individual non-cash purchases, but then they already have access to the credit/debit ledgers, don't they?
The solution that has actually been implemented in Europe is to regulate the payment providers, so inter-bank transfers are effectively free and instant, and credit card fees are capped at 0.3% (i.e. 10x less than in the USA).
> Cash is a government-supplied taxpayer-supported service supplied free of charge for merchants and customers
Cash ain't free!
Sure, I give you the cash, now you have the cash. But you don't want a heap of singles in the back room, you want money in the bank.
Firstly, you need to keep that cash securely, which has a cost. Then, you need staff to reconcile your takings with your figures for the day, which is a cost. Then it needs (secure) transport to the bank (cost) and the bank may charge you fees for cash handling.
Sure, for individuals who sell things infrequently, it's fine, but for a business there are significant costs. This is why (for example) in the late 90s and early 2ks in the UK, large businesses pushed pretty hard for the 'cashback' feature on debit transactions, so they could offload some of it back to the consumer!
This is almost always missed in this debate. Credit cards are evil because they have fees attached and I, as a pure, innocent cash user have to pay the same price! Scandal!
But you may actually be costing the business more, especially in places where such fees are capped. This is part of the reason why we see card-only retailers popping up in some countries now.
>> it should be state-owned and state-managed (see the network of roads ...)
Where I live, the 'roads' are owned by each individual property owner with an easement to every other property owner in the town. Why would we want a group of government bureaucrats to literally own our roads?
If you think Mastercard and Visa fees are too high, fees are higher on Bitcoin.
It's like the way Amway victims will try to sell you an $8 tube of toothpaste, "draw circles" to show that 7 people get a cut from that tube of toothpaste and then say "How does Amway bring you great prices on quality products?" (tap whiteboard) "By eliminating the middleman!"
Not really...the fees for Bitcoin, Ethereum and other L2 options are flat fees and are well under Visa/MC fees most of the time. Might want to look at Western Union and the like too...way way under those fees.
Current transaction fee (for 1 cent or a billion dollars)
- Transactions are more expensive in BTC for small amounts, and more expensive in Visa for big amounts.
- However this is only true if you use on chain transactions for BTC. BTC transactions using lightning are always cheaper than Visa no matter the amount.
- Lightning nodes do not yet form a network big enough to cover 100% of the transactions, and most transactions are small, so the idea that VISA transactions are cheaper for most people is, for all intents and purposes, mostly true at the moment.
Lightning, though, is quite an interesting system. Half of the solution it offers is technical, but half of it will be the social construction of the network of channels. I doubt most people will open one consciously, but I assume wallet providers will make that automatic.
Eventually, this means somebody needing the decentralized aspect of BTC will be able to open a channel and profit, while somebody who wants convenience will use a centralized wallet and be happy.
I suspect most people will want the turn key solution and that the system will centralize a bit.
Remember that for bitcoin value transaction size is not a factor in the transaction fee. So if you want to transmit a billion dollars worth of bitcoin around the world, it is the same exact fee.
Unlike credit card transactions, which are a percentage of size.
Let's also remember that work is being done to do low cost smaller transactions on L2 networks.
I was a crypto skeptic for many years. If you look at crypto purely from an engineering lens, you'll always find it wanting. What I didn't understand was that crypto is as much of an economic and political project, as it is an engineering project. If you think decentralisation and trustlessness are valuable, you should think crypto is important. If you don't care for decentralisation then being negative on crypto is a consistent position.
I did not see any real pro crypto argument in this text.
Nothing is really proven in practice and everything is in ideas.
Meanwhile scammers are taking money from enthusiasts and existing blockchains are burning up a huge amount of energy.
I find the last section of this article particularly ironic considering cryptocurrency is one of the biggest steps back for technological efficiency I've seen in my lifetime. No, credit card fees have not improved in 30 years, but at least the energy required to process those transactions hasn't increased by orders of magnitude in the same time period.
You forgot to mention: if you lose your keys, youre fucked. That is, of course unless you trust a centralized unregulated entity to manage them for you.
This is a huge UX issue for anyone that wants to self-custody. In the same spirit as the OP, people are working on solutions for this. Vitalik posted about it last year: https://vitalik.ca/general/2021/01/11/recovery.html. I don't know the technical details, but Coinbase is launching a wallet system where the private key is "split" between the user and Coinbase.
After explaining improvements to this specific issue, it still feels like way too much friction for the average person to deal with. I think there will be more improvements as time goes on but maybe that's just the cost of doing self-custody. In the end, I guess it's up to the individual to decide whether it's worth it or not.
Banks started out unregulated, and I believe it won't be long until crypto custodians are heavily regulated too. The legislative system just needs time to react.
Wallet recovery is similar to reversing transactions: you can have it if you're willing to nominate some third party that you trust to manage it for you.
It's dishonest to call the author dishonest for this one sentence. They mention Chia in passing at the end of a paragraph on proof-of-work alternatives.
Not really. It manifestly wastes something with, at worst, a much longer runway toward making the planet uninhabitable for humans. That's the important point about PoW waste.
Disappointing article. Bitcoin IS the innovation. Its energy use will continue to grow for a while, but probably not by as much as alarmists think. In return, you get digital property that can't be debased, corroded, eroded, confiscated or corrupted. Not to mention it's fungible, transportable, custodial, so it can be used as money. It's also completely trustless. You don't need anyone's permission to send value to anyone else.
Other cryptocurrencies are experiments in changing Bitcoin in ways that:
1) Are not enough of an improvement to break Bitcoin's network effects (Monero, Litecoin, etc).
2) Change the consensus rules so much that it ruins the incentives and wildly increases complexity and attack space (Proof of Stake blockchains).
We haven't even come close to unlocking the value of the Bitcoin innovation. Thankfully, short-sighted articles like this won't be enough to stop it.
I think an interesting feature of defences of cryptocurencies is that they are similar in their composition as a block chain. In a block chain you have a cryptographically secure summary of the previous block in your current block - but you don't actually know what's in that previous block. Similarly in the arguments defending cryptocurrencies at the top of the article you have the description of the advantages of cryptocurrencies, but the later blocks of text hold no real understanding of what the previous blocks of text meant. So yes, blockchains are incredible because they solve "trust". No, it's not a problem that we can't reverse transactions because we can just have trusted intermediaries.
Yes, Blockchains inherently get their robustness from an incredibly wasteful algorithm. No it's not a problem they're inefficient because we're actually just going to do everything off-chain. No, it's not a contradiction for my defence of cryptocurrencies to advocate for not using them.
Ok, so I've been a bit snarky here, but the core of what I want to say is this: It is very difficult to read about the compromises made to achieve practical uses of crypto and still have the view that there's any of the original value proposition left.
I think the best cryptocurrency defence is just "We've got a lot of smart people trying new things and maybe something of value will end up being created". That's about as compelling as you can get.
> and still have the view that there's any of the original value proposition left.
While not usable as currency, cryptocurrency is still an asset crucial for holding government accountable for its spending. Government can dilute fiat currency, but not Bitcoin for instance.
This is a genuine question. Is there a defense of cryptocurrencies that doesn't follow the pattern of, "yes, that is indeed true, however here is an edge case or counterexample which either doesn't exist yet, or is not in wide use so it's not actually a problem"?
Every article or comment defending cryptocurrencies has followed this pattern and it isn't convincing to me. I'd love to have my mind changed, but when every rebuttal follows the same script, I remain am unmoved.
This article repeats a common misunderstanding of how bitcoin works.
Bitcoin's decentralization does not come from miners. It comes from the fact that users will not recognize blocks that do not follow the protocol rules, as being part of the blockchain.
As a consequence, market participants will not pay as much for "bitcoins" that do not come from valid blocks.
The fundamental service miners provide is that proof of work is used as a "tiebreak" so that bitcoin users can determine the "true" chain among all the chains that follow all the protocol rules.
Miners really are just dumb utilities.
A miner staying within the rules of the protocol can do two things that are negative. First, a denial of service attack by mining empty blocks or censoring transactions. Second, executing a "double spend" if he has more than 50% of the hash capacity.
Those are serious considerations. But we cannot claim that bitcoin's decentralization is reducible to those two things. The current allocation of hash power among miners is actually far more distributed than what is really needed for bitcoin.
Implicit in all the above is, miners do not "vote." That can be a helpful analogy, but it shouldn't be taken too far.
> In fact, I think there are some pretty exciting things happening in the field, even if most of them are further away from reality than their boosters would admit. Moreover, many of crypto’s technical problems are also amenable to some really exciting technical solutions, many of which are already here or on their way to deployment.
I appreciate the article but it's still disappointing to run into a typical misconception about Bitcoin from someone claiming to make a technical defense of cryptocurrency. He states that Bitcoin is now not so decentralized, presumably because of the concentration of mining power. This is a pretty fundamental misunderstanding of what decentralization means with regards to proof of work. What it means is that there is no central authority that can reverse or change transactions, add taxes, only operate from 9 to 5 on weekdays, etc. The protocol defines the behavior, not a centralized org, and it is perfectly decentralized. Anyone can add a mining node, because the protocol itself is decentralized. Having a smaller group of mining pools doesn't change this core characteristic of PoW blockchains.
Most of Green's article goes through, except for the answer to the 'climate change' objection (Objection 1). Which is, of course, the most important, and without it, the article as a whole also fails to convince.
The problem is in this passage (mine the emphasis):
> But the question we should be asking is not whether to be angry about the power consumption of proof-of-work mining. We should be trying to figure out the right path out of this mess. And more concretely, whether there’s a path forward which is more likely to produce *a good outcome* than what is already happening in the industry — namely, that projects are rapidly deploying cleaner technologies to replace proof-of-work.
1. What is a "good outcome?" A good outcome for whom? A great outcome for most species, and most h.sapiens, would be an outright ban, because of the risk spread.
Think actuarially:
There is always the possibility the crypto industry trends cleaner, but legacy chains will be around for yonks, and bluechip crypto is unlikely to ever move off PoW. This means that, yes, while there is a possibility the industry might trend clean, this is an emormously polite way of saying that the downside risk is both severe and likely.
Put another way: if you were selling planet insurance, and you found out they had a lot of PoW crypto going on but were thinking about maybe one day kicking the habit, you'd probably either charge them a fortune or tell them to take a hike, right? Think actuarially.
There is also a suggestion that banning mining (or crypto transactions) might just move the action to other jurisdictions. This suggestion seems strained: for while a coordinated international treaty or ban might make time to confect, it's certainly not impossible. Powerful nations might, say, weave a crypto-ban requirement into multilateral trade agreements, like we already do for intellectual property.
A ban on crypto mining would likely be even easier to implement and spread, as most nation-states correctly view crypto as a threat to their command&control. I mean, look at Ecuador.
Finally, banning crypto would also be something nation-states could take back to their populations as proof of progress on climate change. And they'd even be right.
As harsh as it is for a supporter of crypto (and former industry wonk and former whole-coiner) to say this, I'm sincerely beginning to think that the lasting value of this whole Blockchain Thing has been the thought it has provoked. I, for one, would never have had to think so deeply about the nature of value and currency.
[+] [-] JackC|3 years ago|reply
I think this is arguing that reversibility is not antithetical to permissionless blockchains, because reversibility can be implemented on top of permissionless blockchains.
But that doesn't answer the critique -- the critique is that most real world systems do need trusted parties, and if you build a system of trusted parties on top of a permissionless blockchain, then you could have saved a lot of complexity, risk, and proof-of-economic-waste burn by building on top of a permissioned distributed ledger instead. Reversibility is one example of a design requirement that undoes the claimed advantages of permissionless blockchains that are meant to justify their inherent downsides.
[+] [-] astoor|3 years ago|reply
So Bitcoin was designed for micropayments, and irreversability is a feature to reduce the friction. That is fine because it was intended for "small casual transactions" which very few people are going to invest the time and effort into disputing. It even looked like it might be successful as a micropayment system at first, given small Bitcoin transactions were initially processed without any transaction fees.
The problem is that it has clearly failed as a "peer to peer electronic cash system". It is now used primarily for large transactions, which you absolutely do need consumer protections for if you are a legitimate user (indeed the fact that there aren't consumer protections has made the space so popular with fraudsters, scammers etc.). And as others have commented, the newer cryptocurrencies which attempt to offer such protections end up being worse in every conceivable way from the traditional solutions. Leading back to the original article - is there any legitimate point to cryptocurrencies nowadays?
[+] [-] dcolkitt|3 years ago|reply
The analogy I like to use is what's harder to buy a $1 million house or $1 million of Microsoft stock? The former process takes weeks, and dozens of man hours from lawyers, realtors, escrow agents, bankers, county property registrars, etc. Whereas a buy order to execute Microsoft shares happens in microseconds. That's because we've built a highly streamlined autonomous system for executing stock transactions. Yes of course, there's a trusted layer built on courts and fiat law at the bottom. And occasionally for a corner case, real lawyers have to get involved. But the vast majority of the time, this layer is completely abstracted away and trading stocks are just bits flipped on a computer.
When somebody says something like "let's put houses on the blockchain", the idea isn't to get rid of the fiat law system completely. At the end of the day, you still need courts and sheriffs to enforce property rights. But the idea is that we can wrap the house in an LLC, whose bylaws state that it's governed by on-chain contracts. (Which Delaware Chancery courts will absolutely recognize and enforce.)
Now instead of directly transacting at the very low-tech county property registrar we can transact using an on-chain NFT that grants the equivalent of ownership rights to the house. (This is very analogous to how Cede & Co technically owns almost all the stock shares in America, and holds them under your name for you.)
That NFT is way more powerful and efficient to transact with than the county property record. It lives on a credibly neutral level that already has billions in native capital and liquidity and exposes a fully Turing complete smart contract system. You can sell your house atomically and instantly to anyone in the world with no lawyers or escrow agents. You can pledge it as collateral and borrow against it. You can fractionalize it and sell a portion. Or roll it into a larger portfolio and slice into tranches. All with no more than few dozen lines of code. Without blockchains all of those operations would take hundreds of pages of legal documents and weeks of back and forth.
[+] [-] randomran01234|3 years ago|reply
A loose analogy might be the internet, which aims to be a decentralized global protocol that we can then build centralized systems on top of.
[+] [-] once_inc|3 years ago|reply
Do you want to use DeFi-like solutions with smart contracts? Use RSK.
I don't see what the problem is with moving things up one layer if you retain the option to delve back into the base layer.
[+] [-] rkagerer|3 years ago|reply
[+] [-] cy_overlord|3 years ago|reply
So instead of reversing, we could make all NFTs locked from trading for 3 days after transaction which anyone could appeal for a dispute and buyback the NFT for the same price anytime.
The challenge here is, can we actually come up a set of robust rules that is not too rigid yet not abusable. It's not easy, it won't be right off the bat and it certainly require a lot of critical, innovative thinking. And maybe the solution won't have to be complex at all.
[+] [-] roca|3 years ago|reply
[+] [-] evouga|3 years ago|reply
As soon as you have a trusted central authority (monitoring and reversing payment transactions, interacting with government agencies to execute real estate transaction, etc.) I’m lost on why you need a blockchain.
[+] [-] strofcon|3 years ago|reply
Letter: "Crypo rests on tech that is useless." Blogger: "I disagree, I think there are some fascinating things to be done with blockchain tech! Just... don't expect me to share them. You should DYOR."
sigh
[+] [-] igorkraw|3 years ago|reply
[+] [-] jk7tarYZAQNpTQa|3 years ago|reply
[+] [-] lamontcg|3 years ago|reply
once you have a trusted third party, though, you no longer need permissionless blockchains and PoW/PoS. that also eliminates the need to "mine" and the environmental concerns. of course it also eliminates the get-rich-quick schemes as well. you wind up with VISA running on top of a permissioned DLT.
[+] [-] photochemsyn|3 years ago|reply
The simplest apparent answer is that this (the provision of payment services) is not a competitive market and as small retailers have nowhere else to turn, they're forced to pay high rents to what would have been called a trust in late 19th century Gilded Age terminology.
The solution is also fairly clear: if you have what's called a 'natural monopoly' then it should be state-owned and state-managed (see the network of roads, water pipes, etc.), and if it's not actually a natural monopoly - meaning a system where competition doesn't make sense, i.e. having multiple networks of privately owned roads is silly - then you need anti-trust actions by the government to foster competition in the industry, which would reduce fees and costs for merchants.
Arguably, if consumers had to pay the cost of transactions, rather than merchants, you might seem a lot more political pressure to make credit/debit card transactions the same cost as cash transaction, i.e. no added cost.
Cash is a government-supplied taxpayer-supported service supplied free of charge for merchants and customers, so perhaps that's the best option for the credit/debit interface as well. Of course, this would allow government to track everyone's individual non-cash purchases, but then they already have access to the credit/debit ledgers, don't they?
[+] [-] fanf2|3 years ago|reply
[+] [-] Nursie|3 years ago|reply
Cash ain't free!
Sure, I give you the cash, now you have the cash. But you don't want a heap of singles in the back room, you want money in the bank.
Firstly, you need to keep that cash securely, which has a cost. Then, you need staff to reconcile your takings with your figures for the day, which is a cost. Then it needs (secure) transport to the bank (cost) and the bank may charge you fees for cash handling.
Sure, for individuals who sell things infrequently, it's fine, but for a business there are significant costs. This is why (for example) in the late 90s and early 2ks in the UK, large businesses pushed pretty hard for the 'cashback' feature on debit transactions, so they could offload some of it back to the consumer!
This is almost always missed in this debate. Credit cards are evil because they have fees attached and I, as a pure, innocent cash user have to pay the same price! Scandal!
But you may actually be costing the business more, especially in places where such fees are capped. This is part of the reason why we see card-only retailers popping up in some countries now.
[+] [-] Synaesthesia|3 years ago|reply
[+] [-] landemva|3 years ago|reply
Where I live, the 'roads' are owned by each individual property owner with an easement to every other property owner in the town. Why would we want a group of government bureaucrats to literally own our roads?
[+] [-] PaulHoule|3 years ago|reply
It's like the way Amway victims will try to sell you an $8 tube of toothpaste, "draw circles" to show that 7 people get a cut from that tube of toothpaste and then say "How does Amway bring you great prices on quality products?" (tap whiteboard) "By eliminating the middleman!"
[+] [-] j_walter|3 years ago|reply
Current transaction fee (for 1 cent or a billion dollars)
Bitcoin - $1.62 per transaction
Ethereum - $3.50 per transaction
Ethereum L2 - as low as 12 cents
https://l2fees.info/
Here are credit card fees by comparison (lowest fees assuming you have high volume):
Visa 1.29% + $0.05
Mastercard 1.29% + $0.05
Discover 1.48% + $0.05
American Express 1.58% + $0.10
https://www.fool.com/the-ascent/research/average-credit-card...
[+] [-] BiteCode_dev|3 years ago|reply
- Transactions are more expensive in BTC for small amounts, and more expensive in Visa for big amounts.
- However this is only true if you use on chain transactions for BTC. BTC transactions using lightning are always cheaper than Visa no matter the amount.
- Lightning nodes do not yet form a network big enough to cover 100% of the transactions, and most transactions are small, so the idea that VISA transactions are cheaper for most people is, for all intents and purposes, mostly true at the moment.
Lightning, though, is quite an interesting system. Half of the solution it offers is technical, but half of it will be the social construction of the network of channels. I doubt most people will open one consciously, but I assume wallet providers will make that automatic.
Eventually, this means somebody needing the decentralized aspect of BTC will be able to open a channel and profit, while somebody who wants convenience will use a centralized wallet and be happy.
I suspect most people will want the turn key solution and that the system will centralize a bit.
[+] [-] dxhdr|3 years ago|reply
Mastercard and Visa charge a percentage (?!), Bitcoin is a fixed amount per transaction.
Plus Bitcoin won't deny your ability to make a transaction.
[+] [-] latchkey|3 years ago|reply
Source for this misinformation?
https://ycharts.com/indicators/bitcoin_average_transaction_f...
Remember that for bitcoin value transaction size is not a factor in the transaction fee. So if you want to transmit a billion dollars worth of bitcoin around the world, it is the same exact fee.
Unlike credit card transactions, which are a percentage of size.
Let's also remember that work is being done to do low cost smaller transactions on L2 networks.
[+] [-] lbwtaylor|3 years ago|reply
[+] [-] egeozcan|3 years ago|reply
It's still new! It needs time! You need to follow the latest developments! It has a lot of potential!
It's time already that someone shows some of that potential and it better not be something like NFTs!
[+] [-] npad|3 years ago|reply
[+] [-] zoigdev|3 years ago|reply
[+] [-] AlexandrB|3 years ago|reply
[+] [-] danuker|3 years ago|reply
In the EU we have a functioning carbon cap, and as such mining is less profitable here.
https://ec.europa.eu/clima/eu-action/eu-emissions-trading-sy...
But the US will hear none of it:
https://www.youtube.com/watch?v=MondapIjAAM
[+] [-] cesarb|3 years ago|reply
A quick web search tells me that the law which capped credit card fees at 0.3% is from 2015. That's less than 10 years ago.
[+] [-] yadaeno|3 years ago|reply
[+] [-] almostkorean|3 years ago|reply
After explaining improvements to this specific issue, it still feels like way too much friction for the average person to deal with. I think there will be more improvements as time goes on but maybe that's just the cost of doing self-custody. In the end, I guess it's up to the individual to decide whether it's worth it or not.
[+] [-] everfree|3 years ago|reply
[+] [-] wmf|3 years ago|reply
[+] [-] DennisP|3 years ago|reply
[+] [-] doliveira|3 years ago|reply
[+] [-] Acrobatic_Road|3 years ago|reply
[+] [-] top_post|3 years ago|reply
(big sigh)
[+] [-] matkoniecz|3 years ago|reply
> proof-of-time-and-space construction used by Chia
as reason to reduce importance of induced waste. Chia just wastes something different and is not improvement in any form.
[+] [-] sumy23|3 years ago|reply
[+] [-] andrewflnr|3 years ago|reply
[+] [-] rufusroflpunch|3 years ago|reply
Other cryptocurrencies are experiments in changing Bitcoin in ways that:
1) Are not enough of an improvement to break Bitcoin's network effects (Monero, Litecoin, etc).
2) Change the consensus rules so much that it ruins the incentives and wildly increases complexity and attack space (Proof of Stake blockchains).
We haven't even come close to unlocking the value of the Bitcoin innovation. Thankfully, short-sighted articles like this won't be enough to stop it.
[+] [-] SilverBirch|3 years ago|reply
Yes, Blockchains inherently get their robustness from an incredibly wasteful algorithm. No it's not a problem they're inefficient because we're actually just going to do everything off-chain. No, it's not a contradiction for my defence of cryptocurrencies to advocate for not using them.
Ok, so I've been a bit snarky here, but the core of what I want to say is this: It is very difficult to read about the compromises made to achieve practical uses of crypto and still have the view that there's any of the original value proposition left.
I think the best cryptocurrency defence is just "We've got a lot of smart people trying new things and maybe something of value will end up being created". That's about as compelling as you can get.
[+] [-] danuker|3 years ago|reply
While not usable as currency, cryptocurrency is still an asset crucial for holding government accountable for its spending. Government can dilute fiat currency, but not Bitcoin for instance.
[+] [-] kelseyfrog|3 years ago|reply
Every article or comment defending cryptocurrencies has followed this pattern and it isn't convincing to me. I'd love to have my mind changed, but when every rebuttal follows the same script, I remain am unmoved.
[+] [-] javert|3 years ago|reply
Bitcoin's decentralization does not come from miners. It comes from the fact that users will not recognize blocks that do not follow the protocol rules, as being part of the blockchain.
As a consequence, market participants will not pay as much for "bitcoins" that do not come from valid blocks.
The fundamental service miners provide is that proof of work is used as a "tiebreak" so that bitcoin users can determine the "true" chain among all the chains that follow all the protocol rules.
Miners really are just dumb utilities.
A miner staying within the rules of the protocol can do two things that are negative. First, a denial of service attack by mining empty blocks or censoring transactions. Second, executing a "double spend" if he has more than 50% of the hash capacity.
Those are serious considerations. But we cannot claim that bitcoin's decentralization is reducible to those two things. The current allocation of hash power among miners is actually far more distributed than what is really needed for bitcoin.
Implicit in all the above is, miners do not "vote." That can be a helpful analogy, but it shouldn't be taken too far.
[+] [-] jmull|3 years ago|reply
Show me.
[+] [-] colordrops|3 years ago|reply
[+] [-] jcbrand|3 years ago|reply
[+] [-] undoware|3 years ago|reply
The problem is in this passage (mine the emphasis):
> But the question we should be asking is not whether to be angry about the power consumption of proof-of-work mining. We should be trying to figure out the right path out of this mess. And more concretely, whether there’s a path forward which is more likely to produce *a good outcome* than what is already happening in the industry — namely, that projects are rapidly deploying cleaner technologies to replace proof-of-work.
1. What is a "good outcome?" A good outcome for whom? A great outcome for most species, and most h.sapiens, would be an outright ban, because of the risk spread.
Think actuarially:
There is always the possibility the crypto industry trends cleaner, but legacy chains will be around for yonks, and bluechip crypto is unlikely to ever move off PoW. This means that, yes, while there is a possibility the industry might trend clean, this is an emormously polite way of saying that the downside risk is both severe and likely.
Put another way: if you were selling planet insurance, and you found out they had a lot of PoW crypto going on but were thinking about maybe one day kicking the habit, you'd probably either charge them a fortune or tell them to take a hike, right? Think actuarially.
There is also a suggestion that banning mining (or crypto transactions) might just move the action to other jurisdictions. This suggestion seems strained: for while a coordinated international treaty or ban might make time to confect, it's certainly not impossible. Powerful nations might, say, weave a crypto-ban requirement into multilateral trade agreements, like we already do for intellectual property.
A ban on crypto mining would likely be even easier to implement and spread, as most nation-states correctly view crypto as a threat to their command&control. I mean, look at Ecuador.
Finally, banning crypto would also be something nation-states could take back to their populations as proof of progress on climate change. And they'd even be right.
As harsh as it is for a supporter of crypto (and former industry wonk and former whole-coiner) to say this, I'm sincerely beginning to think that the lasting value of this whole Blockchain Thing has been the thought it has provoked. I, for one, would never have had to think so deeply about the nature of value and currency.
But you know what? These days, I stick to fiat.