Ethereum: A Store of Value with Cash Flow [pdf](ethereumcashflow.com)
ethereumcashflow.com
Ethereum: A Store of Value with Cash Flow [pdf]
https://ethereumcashflow.com/
300 comments
If I am not mistaken, Wikipedia says that more than half of current supply of ETH was distributed among initial investors. That’s also another part of supply formula to consider.
Worth pointing out “initial investors” is anyone who sent 1 btc to the crowdfund back in 2014. It wasnt some closed off thing for vcs, anyone could participate. People just bought their tokens before the network started.
Percentages of BTC were acceptable also, so it was accessible to people with lower income / value levels.
Even worse than you think. Free tokens were handed out to select influencers. Does that sound like a bribe to you?
the best part, Vitalik freely admits this himself.
the best part, Vitalik freely admits this himself.
Yeah, it's as if people who sponsored creation of Israel would be entitled to more than 60% of total Shekel supply—and I am sure most people would agree that it would not be a fair distribution by any measure.
It is guaranteed to change, as the stated policy is "minimal viable issuance", which sounds rather subjective.
How is "minimal" and "viable" determined?
How is "minimal" and "viable" determined?
You said high cash flow due to transaction fees but it's planned a reduction in transaction fees. So in next 6 years the cash flow will be lower, right?
I don't believe Ether is a great store of value as OP claims because it has uncertain scarcity. OP neglected to mention that supply of Ether is unlimited and tends to change readily with scaling updates and is hence unpredictable.
Currently, the argument for scarcity looks good with EIP1559 where the gas fee will consist of a burned base fee and a tip to the miner resulting in overall lower fees causing a potentially deflationary supply. But Ethereum's scarcity is to a larger extends a moving target than say Bitcoin or Monero.
The other reasons for investing OP mentioned were enough for me to go deep a year ago: cash flow, network effects and developer tooling/adoption like no other L1 chain. I looked at other smart contract chain's developer resources for dapp dev and no other's come close to Ethereum. I have been learning Solidity dapp development in my free time since and can recommend the experience.
I don't think scarcity is a realistic point in the investment thesis.
Currently, the argument for scarcity looks good with EIP1559 where the gas fee will consist of a burned base fee and a tip to the miner resulting in overall lower fees causing a potentially deflationary supply. But Ethereum's scarcity is to a larger extends a moving target than say Bitcoin or Monero.
The other reasons for investing OP mentioned were enough for me to go deep a year ago: cash flow, network effects and developer tooling/adoption like no other L1 chain. I looked at other smart contract chain's developer resources for dapp dev and no other's come close to Ethereum. I have been learning Solidity dapp development in my free time since and can recommend the experience.
I don't think scarcity is a realistic point in the investment thesis.
To be fair, I don't think you can really compare many others to Monero, which is the only major cryto with the property of fungibility. Personally I consider that property so important that if a crypto doesn't consider it a first class citizen, I don't buy much or any of the crypto.
>the only major cryto with the property of fungibility
Yes agreed.
Both Bitcoins and ETH tokens can be "tainted" and that taint takes for ever to "diffuse" in the chain.
This makes some Bitcoins/ETH less valuable than others.
For example, most valuable Bitcoins are newly mined coins (they have no history), whereas a - say - Bifinex hacked Bitcoin carries a pungent smell.
Yes agreed.
Both Bitcoins and ETH tokens can be "tainted" and that taint takes for ever to "diffuse" in the chain.
This makes some Bitcoins/ETH less valuable than others.
For example, most valuable Bitcoins are newly mined coins (they have no history), whereas a - say - Bifinex hacked Bitcoin carries a pungent smell.
Remember when we called laundering money that because laundromats were used? Just tumble your coins!
https://en.wikipedia.org/wiki/Cryptocurrency_tumbler
https://en.wikipedia.org/wiki/Cryptocurrency_tumbler
> Just tumble your coins!
Much easier said than done:
Much easier said than done:
- it costs money
- most tumblers aren't safe at all (who's to say they aren't operated by the govt or that they don't keep logs)
- in some cases, you might not get your coins back at all
Tumbling crypto never made sense to me: "I don't want the government to know that I made this $50 selling weed, so I'll trade it for $49 dollars from another weed dealer to make it look 'clean'!"
Shouldn't you expect that most people paying to use tumblers have a reason to do so, and thus the vast majority of coins from tumblers are tainted as well?
Shouldn't you expect that most people paying to use tumblers have a reason to do so, and thus the vast majority of coins from tumblers are tainted as well?
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I agree (an unknown amount of Monero is also a fair bit of my portfolio) but more for ideological reasons: privacy is a requirement for individual financial sovereignty. Fungibility follows privacy of course. I also think it's interesting to wait and see how the fixed tail emission supply works out.
>privacy is a requirement for individual financial sovereignty
What does "individual financial sovereignty" mean though? Money is only useful as part of a social system and therefore requires some sort of social contract.
I'm all for privacy when it comes to storing and transferring amounts that are consistent with personal consumption. I'm not in favour of letting people move millions or billions anonymously unless they are willing to renounce all protections they enjoy under the law.
What does "individual financial sovereignty" mean though? Money is only useful as part of a social system and therefore requires some sort of social contract.
I'm all for privacy when it comes to storing and transferring amounts that are consistent with personal consumption. I'm not in favour of letting people move millions or billions anonymously unless they are willing to renounce all protections they enjoy under the law.
What mostly excites me about Ethereum ist the very vibrant ecosystem of developers and builders around it. You can think of NFTs and DeFi whatever you want, the sheer amount of new applications and innovative ideas on the ethereum blockchain has been mind-boggling.
My personal favorite is Sorare, which combines NFT collectibles with fantasy soccer. And sure, right now everything suffers from high gas prices but it looks like that might be solved over the next 12 months
My personal favorite is Sorare, which combines NFT collectibles with fantasy soccer. And sure, right now everything suffers from high gas prices but it looks like that might be solved over the next 12 months
All those things will never break among the common folk.
The common folk wants ease of use above anything else. It has to be as easy as sending money via paypal.
No doubt ETH can be the base of that technically, but the model which has ETH holders make money off the appreciation of the ETH token in the process is flawed.
Fortune500 and even startups who'd use the open source ETH blockchain technology to bring many services to the common folk won't ever accept to pay a huge cut to parasitic behavior such as to those hodling or staking.
Also nobody ever mentions how the ETH blockchain is opensource. If a startup of a fortune500 wants to do something about it they have a big chuck of the development cost eliminated just by forking off the ETH blockchain. This is great! But just like Android doesn't owe Linus anything, so those companies will owe nothing to the stakers and the ETH holders.
So to summarize, if you want to build something go to Zug, find Vitalik and give him a big kiss because he saved you a lot of money, at the same time show the middle finger to hodlers and stakers on your way out.
On the other hand...if you want to have a shot at getting rich without doing any work...buy deflationary crypto such as king BTC and watch it appreciate vs the dollar....and it will because people are scared as hell about inflation (regardless of the merit of such scare), and everybody is scared about it...from the common person at the supermarket to Stanley Druckenmiller
The common folk wants ease of use above anything else. It has to be as easy as sending money via paypal.
No doubt ETH can be the base of that technically, but the model which has ETH holders make money off the appreciation of the ETH token in the process is flawed.
Fortune500 and even startups who'd use the open source ETH blockchain technology to bring many services to the common folk won't ever accept to pay a huge cut to parasitic behavior such as to those hodling or staking.
Also nobody ever mentions how the ETH blockchain is opensource. If a startup of a fortune500 wants to do something about it they have a big chuck of the development cost eliminated just by forking off the ETH blockchain. This is great! But just like Android doesn't owe Linus anything, so those companies will owe nothing to the stakers and the ETH holders.
So to summarize, if you want to build something go to Zug, find Vitalik and give him a big kiss because he saved you a lot of money, at the same time show the middle finger to hodlers and stakers on your way out.
On the other hand...if you want to have a shot at getting rich without doing any work...buy deflationary crypto such as king BTC and watch it appreciate vs the dollar....and it will because people are scared as hell about inflation (regardless of the merit of such scare), and everybody is scared about it...from the common person at the supermarket to Stanley Druckenmiller
> All those things will never break among the common folk.
To be fair, when I was a 10 year old kid in the nineties, I'd never ever suspect that everyone and their grandma* would be so internet savvy as they are.
* Obviously not all grandparents ;-) But I've seen quite a few grandparents of whom I'd never suspect to use internet services like WhatsApp.
To be fair, when I was a 10 year old kid in the nineties, I'd never ever suspect that everyone and their grandma* would be so internet savvy as they are.
* Obviously not all grandparents ;-) But I've seen quite a few grandparents of whom I'd never suspect to use internet services like WhatsApp.
"All those things will never break among the common folk."
Just like normal folk will never use TCP/IP, know HTML etc?
Nobody needs to know that something runs on a blockchain or how NFTs work. Yes you need to know now but in 10 years my mum will use these things without having any idea what they are. Same as she's using an ipad now without knowing objective C or any underlying protocols and tech.
Just like normal folk will never use TCP/IP, know HTML etc?
Nobody needs to know that something runs on a blockchain or how NFTs work. Yes you need to know now but in 10 years my mum will use these things without having any idea what they are. Same as she's using an ipad now without knowing objective C or any underlying protocols and tech.
> Yes you need to know now but in 10 years my mum will use these things without having any idea what they are
Sure but she will use the Spotify app or the Sotheby app to buy NFTs
Spotify and Sotheby on the other hand they will not even use a blockchain. Just like Coinbase doesn't use a blockchain
This whole decentralization mania solely work when people are are terribly scared of something: Government diluting their purchasing power via printing money and inflation.
That's a really deeply rooted thing in our brain as governments did that since the stone age. That's the only killer app of decentralization. As shown by the marketcap of king BTC and the success of exchanges like Coinbase and Binance.
NFTs, DeFi...all the other stuff...the user doesn't hate Spotify or Sotheby or the Google Store , but let's say for a moment that it does..well even if the ease of use and fees of DeFi were on par with legacy companies (they are not)...the consumer will always keep using the legacy company product and ask the government to tax them more. So they'd have the best of both worlds: a functioning product and a way to express their hatred
Sure but she will use the Spotify app or the Sotheby app to buy NFTs
Spotify and Sotheby on the other hand they will not even use a blockchain. Just like Coinbase doesn't use a blockchain
This whole decentralization mania solely work when people are are terribly scared of something: Government diluting their purchasing power via printing money and inflation.
That's a really deeply rooted thing in our brain as governments did that since the stone age. That's the only killer app of decentralization. As shown by the marketcap of king BTC and the success of exchanges like Coinbase and Binance.
NFTs, DeFi...all the other stuff...the user doesn't hate Spotify or Sotheby or the Google Store , but let's say for a moment that it does..well even if the ease of use and fees of DeFi were on par with legacy companies (they are not)...the consumer will always keep using the legacy company product and ask the government to tax them more. So they'd have the best of both worlds: a functioning product and a way to express their hatred
I disagree.
Decentralization makes it possible to cut out the middle man, Sotheby is no longer needed to do art deals, you can buy directly via smart contract. Will some people buy via Sotheby's still because they provide value in curating items? Sure but they will have much more competition than they do now.
It also makes new things possible, for instance the original artist could get a cut of every resale of his art. People can own parts of art, music etc. Artists can go directly to their fans.
Another example is Defi which also cuts out the middleman. I want to send you 100 usd. I have euro, right now I need to go to my bank app and they will convert for a pretty big fee , they will also take 5 days to send it to you if it's international and god help me if there are holidays involved. With defi I send instantly and I will be able to choose what kind of value I send and you will be able to choose what kind of value you want to receive. I don't even need to know. I could send you euros and you receive in usd, it passes through a defi smart contract on the way without any of us knowing. If I'm a farmer and I have corn futures I could probably pay in that and you would still just get usd. Again cuts out the middleman.
Does it help that it's also censorship resistant and trustless? Yes. The ease of use is not on par with legacy for my mum.. yet. But that was also the case in 1995 with the internet.
It also makes new things possible, for instance the original artist could get a cut of every resale of his art. People can own parts of art, music etc. Artists can go directly to their fans.
Another example is Defi which also cuts out the middleman. I want to send you 100 usd. I have euro, right now I need to go to my bank app and they will convert for a pretty big fee , they will also take 5 days to send it to you if it's international and god help me if there are holidays involved. With defi I send instantly and I will be able to choose what kind of value I send and you will be able to choose what kind of value you want to receive. I don't even need to know. I could send you euros and you receive in usd, it passes through a defi smart contract on the way without any of us knowing. If I'm a farmer and I have corn futures I could probably pay in that and you would still just get usd. Again cuts out the middleman.
Does it help that it's also censorship resistant and trustless? Yes. The ease of use is not on par with legacy for my mum.. yet. But that was also the case in 1995 with the internet.
> Sotheby is no longer needed to do art deals, you can buy directly via smart contract.
Sotheby's was never about the actual transaction, there has historically been little technical barrier in this area - the real barrier has been grift, fakes, and limited market pools. Crypto doesn't solve any of these things, so they will remain the real barrier.
> for instance the original artist could get a cut of every resale of his art. People can own parts of art, music etc. Artists can go directly to their fans.
There is no technical barrier to any of these things now, other than the difficulty of setting up contracts. You can speculate that making the contracts easier to set up will result in lots more of it; but that is a pretty strong assumption that this is the "real" barrier. Like the fine art case, it may well not be. I suspect that in some areas it will result in some interesting things that are low enough value (at least per transaction) that nobody bothered to figure out an agreement on them, particularly across borders. But this has a huge risk of being shut down for being at minimum tax-evasion adjacent, even if useful.
> I could send you euros and you receive in usd, it passes through a defi smart contract on the way without any of us knowing.
This is easily done now by traditional financial transactions, the only problem is the FX risk and transaction fees may be a) higher than you want and b) unpredictable.
Neither of those things are "solved" by using defi, you are basically hoping that the fees are/remain smaller, and possibly handwaving about the FX risk on some future with the underlying is useful to both parties.
Sotheby's was never about the actual transaction, there has historically been little technical barrier in this area - the real barrier has been grift, fakes, and limited market pools. Crypto doesn't solve any of these things, so they will remain the real barrier.
> for instance the original artist could get a cut of every resale of his art. People can own parts of art, music etc. Artists can go directly to their fans.
There is no technical barrier to any of these things now, other than the difficulty of setting up contracts. You can speculate that making the contracts easier to set up will result in lots more of it; but that is a pretty strong assumption that this is the "real" barrier. Like the fine art case, it may well not be. I suspect that in some areas it will result in some interesting things that are low enough value (at least per transaction) that nobody bothered to figure out an agreement on them, particularly across borders. But this has a huge risk of being shut down for being at minimum tax-evasion adjacent, even if useful.
> I could send you euros and you receive in usd, it passes through a defi smart contract on the way without any of us knowing.
This is easily done now by traditional financial transactions, the only problem is the FX risk and transaction fees may be a) higher than you want and b) unpredictable.
Neither of those things are "solved" by using defi, you are basically hoping that the fees are/remain smaller, and possibly handwaving about the FX risk on some future with the underlying is useful to both parties.
All these products are amazing technical feats, but they all aim to do one thing: cutting the middleman
The middleman is a social necessity, not solely a technical one. Retail doesn't want the responsibility. Is that simple, so enter the middleman there to absorb risk.
A protocol can't be a middleman. A middleman should be capable of being sued and be the fall guy if something goes wrong. Mostly it should be there to give peace of mind to the customer.
A protocol can't give peace of mind to the customer given that such code can't be read by 99.99999999999% of the population.
The middleman needs to exist to give peace of mind to the customer, and as I said it can't be a protocol. So it can only be a company with a brand, spending millions in Ads to earn the trust of the consumer so that he'd feel confident to put his money in it and in turn can sleep tight at night, knowing that his money are with an institution which is somehow trustworthy.
Nobody in the crypto world ever makes a market study or a revenue projection, or even a survey among the population and users.
People go and build stuff. Projecting themselves into the retail user. The only problem is that the crypto founder is not representative of the retail user, not even one bit. The crypto founder wants the responsibility, wants to kick the the final penalty in the World Cup final or be with the ball in your hands and 2 mins to win the SuperBowl. That is not the mindset of the retail user.
"We ship the products we'd want to buy" as Steve Jobs said in a keynote...only he used it as catchphrase to get the applauses and sell Apple to the world and to Wall Street.
People in crytpo , they do it for real. You never do it for real. You end up with your butt on the ground and nothing to show for financially.
The middleman is a social necessity, not solely a technical one. Retail doesn't want the responsibility. Is that simple, so enter the middleman there to absorb risk.
A protocol can't be a middleman. A middleman should be capable of being sued and be the fall guy if something goes wrong. Mostly it should be there to give peace of mind to the customer.
A protocol can't give peace of mind to the customer given that such code can't be read by 99.99999999999% of the population.
The middleman needs to exist to give peace of mind to the customer, and as I said it can't be a protocol. So it can only be a company with a brand, spending millions in Ads to earn the trust of the consumer so that he'd feel confident to put his money in it and in turn can sleep tight at night, knowing that his money are with an institution which is somehow trustworthy.
Nobody in the crypto world ever makes a market study or a revenue projection, or even a survey among the population and users.
People go and build stuff. Projecting themselves into the retail user. The only problem is that the crypto founder is not representative of the retail user, not even one bit. The crypto founder wants the responsibility, wants to kick the the final penalty in the World Cup final or be with the ball in your hands and 2 mins to win the SuperBowl. That is not the mindset of the retail user.
"We ship the products we'd want to buy" as Steve Jobs said in a keynote...only he used it as catchphrase to get the applauses and sell Apple to the world and to Wall Street.
People in crytpo , they do it for real. You never do it for real. You end up with your butt on the ground and nothing to show for financially.
A regular centralized company wouldn't want to necessarily use the ETH blockchain. They would use a private blockchain for internal auditing or supply chain partnerships, and would probably build it on something like HyperLedger https://www.hyperledger.org/use/fabric (What?! The Linux Foundation??).
Binance did fork ETH and has built out the Binance Smart Chain. Problem is that is still centralized. The unresolved debate is whether its the code or the network effects that matter.
Oh by the way: Bitcoin is open sourced too. Here's the link! https://github.com/bitcoin
Binance did fork ETH and has built out the Binance Smart Chain. Problem is that is still centralized. The unresolved debate is whether its the code or the network effects that matter.
Oh by the way: Bitcoin is open sourced too. Here's the link! https://github.com/bitcoin
Why would any company build a private blockchain? Private companies have top to bottom control of their systems, which means they don't need proof of work or proof of stake or any other system to establish trust: they can just issue PKI keys to employees from a database.
Private blockchain has never made any sense: you just give all your employees private keys and move on with your life.
EDIT: Which is to say, I'm sure a lot of people are saying they're doing it, and it is yet to be for anything more then to say "we're doing blockchain" to investors and the public.
EDIT 2: Reading through the Hyperledger case studies seems to bare this out as well - the implementations are comparatively small, and keep desperately asking the question "was blockchain vital to any of this, or was the actual innovation you just finally automated something into a database?"
Private blockchain has never made any sense: you just give all your employees private keys and move on with your life.
EDIT: Which is to say, I'm sure a lot of people are saying they're doing it, and it is yet to be for anything more then to say "we're doing blockchain" to investors and the public.
EDIT 2: Reading through the Hyperledger case studies seems to bare this out as well - the implementations are comparatively small, and keep desperately asking the question "was blockchain vital to any of this, or was the actual innovation you just finally automated something into a database?"
Because consortiums of companies exist?
Because companies don't really trust each other and have huge legal teams review 100+ pg contracts? Even internally trust is lacking at times?
It does have some efficiencies. They are likely tiny compared to separating money and state, like we managed to separate religion and state.
Because companies don't really trust each other and have huge legal teams review 100+ pg contracts? Even internally trust is lacking at times?
It does have some efficiencies. They are likely tiny compared to separating money and state, like we managed to separate religion and state.
Clearly we have different interpretations of the case studies. Walmart seems interested.
But I guess its all just buzzwords and speculation! All these people wasting their time on something so obviously useless. You should let them know!!
But I guess its all just buzzwords and speculation! All these people wasting their time on something so obviously useless. You should let them know!!
Walmart have literally thousands if not tens of thousands of product lines, but after an initial study are not using their hyperledger implementation for more then 25 according to the website.
But that's not the real problem: the real problem is, how can blockchain contribute anything to this problem for them? The process of validating the origin of goods depends on remotely uploading certificates of authenticity - an artifact produced off-chain.
From that point on, nothing else matters - since it all depends on whether that certificate is legitimate, trust is external to the chain.
The rest does not require "blockchain" at all and is actively made more difficult by it - since every other step is just regular logistics tracking, something Walmart is very good at.
Again: what possible benefit is blockchain bringing here? The original artifact is off chain, the goods in question are offchain and the cited benefit is not "improved security" -- it's "quicker look ups". But...that would've been achieved by just scanning barcode numbers into a database at every location (which again: is trust, it's not a fact which is established on-chain).
So yes, I do believe people are wasting their time on something obviously useless - IBM was involved and their biggest contribution to my country was to call 25 million people logging on to do a census on one night a denial of service attack. Walmart executives aren't technical - they need to know "what the blockchain could do" and IBM sells them some snakeoil.
But that's not the real problem: the real problem is, how can blockchain contribute anything to this problem for them? The process of validating the origin of goods depends on remotely uploading certificates of authenticity - an artifact produced off-chain.
From that point on, nothing else matters - since it all depends on whether that certificate is legitimate, trust is external to the chain.
The rest does not require "blockchain" at all and is actively made more difficult by it - since every other step is just regular logistics tracking, something Walmart is very good at.
Again: what possible benefit is blockchain bringing here? The original artifact is off chain, the goods in question are offchain and the cited benefit is not "improved security" -- it's "quicker look ups". But...that would've been achieved by just scanning barcode numbers into a database at every location (which again: is trust, it's not a fact which is established on-chain).
So yes, I do believe people are wasting their time on something obviously useless - IBM was involved and their biggest contribution to my country was to call 25 million people logging on to do a census on one night a denial of service attack. Walmart executives aren't technical - they need to know "what the blockchain could do" and IBM sells them some snakeoil.
> Bitcoin is open source
Bitcoin is open source, all right. But the first mover advantage and marketing campaign that it has...well it's insurmountable at this point.
> Problem is that is still centralized
The world doesn't give a damn about that. The only killer app of decentralization as of today is the ability to give people peace of mind that the unit of account they use to store their wealth cannot be tempered with by anybody.
Literally the only application of decentralization was the ability to avoid the ever present threat of money printing because people are scared of inflation and rightfully so. Ever since the stone age people have been diluted by the the central currency authority, it's a fear that is deeply rooted in our brains.
People aren't similarly scared about Paypal or Visa processing their transactions.
Fear is the greatest motivation and fear of inflation is the only thing giving the decentralization thing any market. Everybody , ranging from the supermarket employee to Stanley Druckenmiller...they are all scared as hell about inflation.
And it shows in the marketcap and price of king BTC
BTC gives those 7 billions people a way to express such fears in the market whereas they could only buy Gold, Silver, and Inflation indexed bonds before BTC came about.
Bitcoin is open source, all right. But the first mover advantage and marketing campaign that it has...well it's insurmountable at this point.
> Problem is that is still centralized
The world doesn't give a damn about that. The only killer app of decentralization as of today is the ability to give people peace of mind that the unit of account they use to store their wealth cannot be tempered with by anybody.
Literally the only application of decentralization was the ability to avoid the ever present threat of money printing because people are scared of inflation and rightfully so. Ever since the stone age people have been diluted by the the central currency authority, it's a fear that is deeply rooted in our brains.
People aren't similarly scared about Paypal or Visa processing their transactions.
Fear is the greatest motivation and fear of inflation is the only thing giving the decentralization thing any market. Everybody , ranging from the supermarket employee to Stanley Druckenmiller...they are all scared as hell about inflation.
And it shows in the marketcap and price of king BTC
BTC gives those 7 billions people a way to express such fears in the market whereas they could only buy Gold, Silver, and Inflation indexed bonds before BTC came about.
>>The only killer app of decentralization as of today is the ability to give people peace of mind that the unit of account they use to store their wealth cannot be tempered with by anybody.
Being able to use a tamper-proof currency in financial applications that are decentralized means one's holdings of that currency remain tamper-proof even when they are employing them in financial applications. That is the value that Ethereum's smart contract functionality provides.
Being able to use a tamper-proof currency in financial applications that are decentralized means one's holdings of that currency remain tamper-proof even when they are employing them in financial applications. That is the value that Ethereum's smart contract functionality provides.
> financial applications
Legacy financial applications are fine. People who are afraid of inflation just convert BTC>USD the sole amount they need to use the financial application and that's it.
Also DeFi apps are very illiquid and extremely complicated to use.
Finally let's not hide the truth: 99% of financial apps are based on loans. Crypto loans are doomed because people don't want to borrow crypto as they anticipate huge appreciation and such appreciation would leave them in a hole financially speaking.
Also without an identity system a borrower can just steal crypto, and never pay back interest or principal
Also the lender requires high interest to separate themselves from their crypto considering how novel is the system and how frequent hacks and as I said people outright fleeing are.
The most successful crypto loans are the ones denominated in USD and happening on centralized platforms (and those crypto never leave the platform as they are used to short)
Legacy financial applications are fine. People who are afraid of inflation just convert BTC>USD the sole amount they need to use the financial application and that's it.
Also DeFi apps are very illiquid and extremely complicated to use.
Finally let's not hide the truth: 99% of financial apps are based on loans. Crypto loans are doomed because people don't want to borrow crypto as they anticipate huge appreciation and such appreciation would leave them in a hole financially speaking.
Also without an identity system a borrower can just steal crypto, and never pay back interest or principal
Also the lender requires high interest to separate themselves from their crypto considering how novel is the system and how frequent hacks and as I said people outright fleeing are.
The most successful crypto loans are the ones denominated in USD and happening on centralized platforms (and those crypto never leave the platform as they are used to short)
>>Legacy financial applications are fine.
They are not at all. Governments and financial institutions can lock funds, do 'hair cuts', as they did in the European financial crisis, and engage in other such shenanigans. They can debank or otherwise exclude people and companies from the payment system, or refuse them banking services at all.
But really, your statement says it all. This is what anti-Ethereum advocacy amounts to: advocating for the legacy financial system, and the one Satoshi Nakamoto specifically criticized, including in the Bitcoin white paper:
https://www.bitcoin.com/bitcoin.pdf
"Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model. Completely non-reversible transactions are not really possible, since financial institutions cannot avoid mediating disputes. The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for nonreversible services. With the possibility of reversal, the need for trust spreads.
Merchants must be wary of their customers, hassling them for more information than they would otherwise need. A certain percentage of fraud is accepted as unavoidable. These costs and payment uncertainties can be avoided in person by using physical currency, but no mechanism exists to make payments over a communications channel without a trusted party. 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. "
>>Also DeFi apps are very illiquid and extremely complicated to use.
Uniswap had $10 billion in trading volume over the last week. That's in the same league as major exchanges like Bitfinex and Kraken. It's also extremely easy to use, with no sign-up/registration required, and a trade being possible with 3 clicks.
They are not at all. Governments and financial institutions can lock funds, do 'hair cuts', as they did in the European financial crisis, and engage in other such shenanigans. They can debank or otherwise exclude people and companies from the payment system, or refuse them banking services at all.
But really, your statement says it all. This is what anti-Ethereum advocacy amounts to: advocating for the legacy financial system, and the one Satoshi Nakamoto specifically criticized, including in the Bitcoin white paper:
https://www.bitcoin.com/bitcoin.pdf
"Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model. Completely non-reversible transactions are not really possible, since financial institutions cannot avoid mediating disputes. The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for nonreversible services. With the possibility of reversal, the need for trust spreads.
Merchants must be wary of their customers, hassling them for more information than they would otherwise need. A certain percentage of fraud is accepted as unavoidable. These costs and payment uncertainties can be avoided in person by using physical currency, but no mechanism exists to make payments over a communications channel without a trusted party. 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. "
>>Also DeFi apps are very illiquid and extremely complicated to use.
Uniswap had $10 billion in trading volume over the last week. That's in the same league as major exchanges like Bitfinex and Kraken. It's also extremely easy to use, with no sign-up/registration required, and a trade being possible with 3 clicks.
> They are not at all. Governments and financial institutions can lock funds, do 'hair cuts', as they did in the European financial crisis, and engage in other such shenanigans. They can debank or otherwise exclude people and companies from the payment system, or refuse them banking services at all.
All that is signed off and approved by the popultion. In the beginning the nascent financial system which today is labled "legacy" was the wild west as well. Then it was an organic growth of scrutiny because it was demanded by the population. Every megasocial system such as US, EU, China...even North Korea organizes itself based on the population desires.
All those things aren't imposed from above by an omniscent and evil dictator or done in the dark, the Patriot Act is supported by the majority of the population, so it's all the rest.
People accept and embrace the government playing the role of policeman in the financial and capital markets.
You are the fringe minority, and frankly people in the cryptospace lack the pragmatism to understand that they are a fringe minority.
People who are the fringe minority should hide and find holes in the power of the controlling authority and USE THEM AND KEEP THEM TO THEMSELVES opposed to creating mega structures to invite and pursue those who sign off and approve the aforementioned authority. Such attempts will fail because the target demographics is totally onboard with the authority.
> Uniswap had $10 billion in trading volume over the last week. That's in the same league as major exchanges like Bitfinex and Kraken. It's also extremely easy to use, with no sign-up/registration required, and a trade being possible with 3 clicks.
Sure in the ETH ecosystem, tell me again where can I spend ETH or Stablecoins based on ETH? Nowhere.
All that is signed off and approved by the popultion. In the beginning the nascent financial system which today is labled "legacy" was the wild west as well. Then it was an organic growth of scrutiny because it was demanded by the population. Every megasocial system such as US, EU, China...even North Korea organizes itself based on the population desires.
All those things aren't imposed from above by an omniscent and evil dictator or done in the dark, the Patriot Act is supported by the majority of the population, so it's all the rest.
People accept and embrace the government playing the role of policeman in the financial and capital markets.
You are the fringe minority, and frankly people in the cryptospace lack the pragmatism to understand that they are a fringe minority.
People who are the fringe minority should hide and find holes in the power of the controlling authority and USE THEM AND KEEP THEM TO THEMSELVES opposed to creating mega structures to invite and pursue those who sign off and approve the aforementioned authority. Such attempts will fail because the target demographics is totally onboard with the authority.
> Uniswap had $10 billion in trading volume over the last week. That's in the same league as major exchanges like Bitfinex and Kraken. It's also extremely easy to use, with no sign-up/registration required, and a trade being possible with 3 clicks.
Sure in the ETH ecosystem, tell me again where can I spend ETH or Stablecoins based on ETH? Nowhere.
>>All that is signed off and approved by the popultion.
Same with the central banks that inflate the currency. They are created by the government that the population approves of. You're making a selective argument against the principle of financial self-sovereignty that underlies the entire Bitcoin and cryptocurrency movement, that just happens to lead to a conclusion that decentralized finance is bad, whereas a decentralized currency - bitcoin - is good.
>>Then it was an organic growth of scrutiny because it was demanded by the population. Every megasocial system such as US, EU, China...even North Korea organizes itself based on the population desires.
There is nothing organic about massively complex political systems. They are as artificial/non-organic as anything else produced by modern human civilization. They are nascent forms of human organization susceptible to massive corruption and rent-seeking. Putting all that aside, majority approval does not justify violating people's basic liberties/human-rights, like the right to engage with other consenting adults in mutually voluntary economic interactions. That is true whether you are talking about the US, or North Korea.
>>Such attempts will fail because the target demographics is totally onboard with the authority.
What the majority approves of changes when technology changes. When the social costs of enforcing a particular type of law that limits voluntary interaction massively increases, for example as a result of the advent of widely accessible strong encryption, then the majority will become more opposed to enforcing such laws.
>>Sure in the ETH ecosystem
ETH-based assets will gain mass-adoption soon enough. And when they do, your final plausibly pro-crypto objection to DeFi will have disappeared. All you'll be left with is the argument that cryptocurrency, as a whole, is bad for society, by enabling non-compliance with politically enacted forms of centralized gatekeeping.
At that point, it will be even more obvious now that an argument against decentralized finance is an argument against the entire principle that Bitcoin is based on, and was created to advance.
Same with the central banks that inflate the currency. They are created by the government that the population approves of. You're making a selective argument against the principle of financial self-sovereignty that underlies the entire Bitcoin and cryptocurrency movement, that just happens to lead to a conclusion that decentralized finance is bad, whereas a decentralized currency - bitcoin - is good.
>>Then it was an organic growth of scrutiny because it was demanded by the population. Every megasocial system such as US, EU, China...even North Korea organizes itself based on the population desires.
There is nothing organic about massively complex political systems. They are as artificial/non-organic as anything else produced by modern human civilization. They are nascent forms of human organization susceptible to massive corruption and rent-seeking. Putting all that aside, majority approval does not justify violating people's basic liberties/human-rights, like the right to engage with other consenting adults in mutually voluntary economic interactions. That is true whether you are talking about the US, or North Korea.
>>Such attempts will fail because the target demographics is totally onboard with the authority.
What the majority approves of changes when technology changes. When the social costs of enforcing a particular type of law that limits voluntary interaction massively increases, for example as a result of the advent of widely accessible strong encryption, then the majority will become more opposed to enforcing such laws.
>>Sure in the ETH ecosystem
ETH-based assets will gain mass-adoption soon enough. And when they do, your final plausibly pro-crypto objection to DeFi will have disappeared. All you'll be left with is the argument that cryptocurrency, as a whole, is bad for society, by enabling non-compliance with politically enacted forms of centralized gatekeeping.
At that point, it will be even more obvious now that an argument against decentralized finance is an argument against the entire principle that Bitcoin is based on, and was created to advance.
> Same with the central banks that inflate the currency. They are created by the government that the population approves of. You're making a selective argument against the principle of financial self-sovereignty that underlies the entire Bitcoin and cryptocurrency movement
The fed is non elected. there is a separation between Govt and the Fed
Public cannot vote on the Fed Fund Rate
The fed is non elected. there is a separation between Govt and the Fed
Public cannot vote on the Fed Fund Rate
>All those things will never break among the common folk.
The common folk wants ease of use above anything else
In my experience the common folk want number go up above anything else.
In my experience the common folk want number go up above anything else.
> All those things will never break among the common folk.
You should google "NFT".
You should google "NFT".
Not exactly broken among the common folk, although there is a sudden wave of artists chasing whale money.
What stops Spotify or Sotheby or any other proper company from forking off the ETH blockchain and sell NFT as a service?
Nothing..they won't even have to pay because the project is opensource.
They can solely focus on ease of use and marketing which is what proper companies do best and just take the technical part without any compensation.
This is also the reason why Larry Page is among the richest men in the world and Linux' Linus is a nobody who is only known and relevant among nerds
Nothing..they won't even have to pay because the project is opensource.
They can solely focus on ease of use and marketing which is what proper companies do best and just take the technical part without any compensation.
This is also the reason why Larry Page is among the richest men in the world and Linux' Linus is a nobody who is only known and relevant among nerds
> What stops Spotify or Sotheby or any other proper company from forking off the ETH blockchain and sell NFT as a service?
It's as saying if Facebook released all of its code then suddenly it would get competition. It wouldn't.
There's the whole infrastructure behind it: thousands of nodes running the blockchain, thousands of applications running on it, developers in this sphere are very scarce because it's so complicated. If you wanted to try to create yet another "Ethereum killer", you would also need to convince developers to write apps on your chain, and people to run the nodes.
By the way, to say that Linus Torvalds is a nobody is a ridiculous thing. His net worth is humongous to begin with.
It's as saying if Facebook released all of its code then suddenly it would get competition. It wouldn't.
There's the whole infrastructure behind it: thousands of nodes running the blockchain, thousands of applications running on it, developers in this sphere are very scarce because it's so complicated. If you wanted to try to create yet another "Ethereum killer", you would also need to convince developers to write apps on your chain, and people to run the nodes.
By the way, to say that Linus Torvalds is a nobody is a ridiculous thing. His net worth is humongous to begin with.
> There's the whole infrastructure behind it: thousands of nodes running the blockchain, thousands of applications running on it, developers in this sphere are very scarce because it's so complicated. If you wanted to try to create yet another "Ethereum killer", you would also need to convince developers to write apps on your chain, and people to run the nodes.
Are those things really needed to ...you know commercially sell the product to the public, give them ease of use and make money in the process?
Because if we must ride the blockchain thing for Venture Capital funding or to look hip among the public on twitter...well we can stick an ethereum logo on it and invite Vitalik to the company podcast.
It's much easier and accomplishes the goal in much more straightforward manner.
Are those things really needed to ...you know commercially sell the product to the public, give them ease of use and make money in the process?
Because if we must ride the blockchain thing for Venture Capital funding or to look hip among the public on twitter...well we can stick an ethereum logo on it and invite Vitalik to the company podcast.
It's much easier and accomplishes the goal in much more straightforward manner.
Of course you can do the Binance thingy (copy of Ethereum and have complete centralization). I don't believe that will prevail in the long term. Decentralization is a must.
Ethereum is quite exciting in that regard, but my feeling is that most eth enthusiasts don't actually care about that. They only care about the value and thus it has become another crypto pyramid scheme for now.
The only crypto community who has shown any genuine effort in creating a "currency" is Dogecoin. And that is mainly because they are more aware that their coin has no value without real adoption. But sadly, even that has been infested with the pyramid scheme HODLers after the recent surge in value.
Another problem with Eth is that regular folk are thrown off when they hear things like "smart contracts", "NFT" etc.. So, in terms of a realistic crypto "currency" having widespread adoption, it seems hard to justify any of them at the moment.
I love using crypto for payments as it can be incredibly simple when done right. I really hope to see a crypto that works toward distributing wealth and opportunity though rather than the toxic crypto culture of HODlers we see today!
The only crypto community who has shown any genuine effort in creating a "currency" is Dogecoin. And that is mainly because they are more aware that their coin has no value without real adoption. But sadly, even that has been infested with the pyramid scheme HODLers after the recent surge in value.
Another problem with Eth is that regular folk are thrown off when they hear things like "smart contracts", "NFT" etc.. So, in terms of a realistic crypto "currency" having widespread adoption, it seems hard to justify any of them at the moment.
I love using crypto for payments as it can be incredibly simple when done right. I really hope to see a crypto that works toward distributing wealth and opportunity though rather than the toxic crypto culture of HODlers we see today!
How do you define a pyramid scheme? Thing go up in value?
A Ponzi is when the returns of early investors are "sustained" by the flux of new investors.
A cashflow producing venture is not a Ponzi since that cashflow is supposed to ensure the returns of all investors.
A cashflow producing venture is not a Ponzi since that cashflow is supposed to ensure the returns of all investors.
The problem with this definition is that it’s normal and legitimate for later investors to buy out early investors. You need to know more about what’s really going on to tell whether it’s a fraud or not.
Recommended reading: Lying for Money: How Legendary Frauds Reveal the Workings of Our World
Recommended reading: Lying for Money: How Legendary Frauds Reveal the Workings of Our World
I'd basically see it as an investment opportunity that greatly favours early adopters.
By this defintion any investment is a pyramid scheme. Even savings accounts give the greatest return to those who start early.
Which investment opportunities don't favor early adopters?
70% of ethereum was sold at rock bottom prices to "early adopters" in a presale.
You are right. It is a ponzi.
You are right. It is a ponzi.
I hope you then also count stocks, land ownership etc. as such.
to a degree but not so much. Land has real value. Stocks are different again. The idea that eth is considered more of a stock than a currency is the root of its problems imo. I have a real itch to one day see a crypto being widely adapted as an actual currency. I think dogecoin is the only one in our current crypto eco-system that has even a fraction of a chance in filling that space. I'm sure it will happen some day, but maybe not with our current crop of cryptos.
Yea, ETH is more like a stock of the biggest crypto lab, its kind of the Apple of crypto (in the way it transferred innovation happening in a field under into its own garden). I think we will see a currency widely adopted, and its going to be BTC or BTC-based (fractional banking but with crypto).
> I have a real itch to one day see a crypto being widely adapted as an actual currency.
Monero is closest to achieving the original cryptocurrency dream. Private and anonymous transactions, good speeds, low fees, ASIC and GPU resistance, committed developers that are actually improving the coin over time, open source wallets even on mobile.
> I think dogecoin is the only one in our current crypto eco-system that has even a fraction of a chance in filling that space.
Why do you say that?
Monero is closest to achieving the original cryptocurrency dream. Private and anonymous transactions, good speeds, low fees, ASIC and GPU resistance, committed developers that are actually improving the coin over time, open source wallets even on mobile.
> I think dogecoin is the only one in our current crypto eco-system that has even a fraction of a chance in filling that space.
Why do you say that?
There is no doubt that it's a pyramid scheme.
Everything is a pyramid scheme these days including the entire stock market (especially big tech).
But the modern monetary system is designed to sustain such pyramid schemes. It can keep them going forever. No matter how much net value they destroy; it will offload the costs to fiat salary earners who accept fiat currencies.
TBH I'm confused how the world economy is able to keep running at all with all these extreme inefficiencies everywhere.
Everything is a pyramid scheme these days including the entire stock market (especially big tech).
But the modern monetary system is designed to sustain such pyramid schemes. It can keep them going forever. No matter how much net value they destroy; it will offload the costs to fiat salary earners who accept fiat currencies.
TBH I'm confused how the world economy is able to keep running at all with all these extreme inefficiencies everywhere.
Sooner or later it will have to end.
https://en.wikipedia.org/wiki/Minsky_moment
https://en.wikipedia.org/wiki/Minsky_moment
I don't think so because the entire stock market would collapse if the reserve banks stopped printing money.
Smart people look at Bitcoin and Ethereum and think "wow that's inefficient, if the banks raise interest rates, they're going to get wiped out" but they don't realize that most corporations are just as capital inefficient and are in the same position. They are both unprofitable, therefore both worthless... Does it matter that one may be slightly less worthless than the other? The intrinsic market cap (if we had a free market) would be less than 0 in both cases.
Smart people look at Bitcoin and Ethereum and think "wow that's inefficient, if the banks raise interest rates, they're going to get wiped out" but they don't realize that most corporations are just as capital inefficient and are in the same position. They are both unprofitable, therefore both worthless... Does it matter that one may be slightly less worthless than the other? The intrinsic market cap (if we had a free market) would be less than 0 in both cases.
Not sure why this is being downvoted.
Before the pandemic, the Fed tried to wipe out the crypto space by raising interest rates... Then when they realized that their policies were threatening to take out the entire stock market instead, they decided to suddenly drop interest rates back to 0.
It seems like the Fed was trying to find a sweet spot of interest rates which would wipe out all speculative investments but would allow non-speculative investments to stay afloat... They simply didn't anticipate that stocks might be more speculative than crypto.
Before the pandemic, the Fed tried to wipe out the crypto space by raising interest rates... Then when they realized that their policies were threatening to take out the entire stock market instead, they decided to suddenly drop interest rates back to 0.
It seems like the Fed was trying to find a sweet spot of interest rates which would wipe out all speculative investments but would allow non-speculative investments to stay afloat... They simply didn't anticipate that stocks might be more speculative than crypto.
A question I've asked before: are there any applications which don't involve speculation?
Do you consider earning interest to be speculation?
I can put stablecoins (crypto dollars) in a lending protocol like Aave and earn ~10% APY. Compare that to my savings account, which pays out 0.25% APY.
Or how about the stablecoins themselves? MakerDAO creates the Dai stablecoin, backed by crypto-native assets like ETH & BTC.
I have a number of friends in Argentina who are surviving hyper-inflation by keeping their wealth in stablecoins.
I can put stablecoins (crypto dollars) in a lending protocol like Aave and earn ~10% APY. Compare that to my savings account, which pays out 0.25% APY.
Or how about the stablecoins themselves? MakerDAO creates the Dai stablecoin, backed by crypto-native assets like ETH & BTC.
I have a number of friends in Argentina who are surviving hyper-inflation by keeping their wealth in stablecoins.
Earning 10% "riskfree" isn't speculation, it's a Ponzi. What serious borrower needs to pay 10% to access credit? So then, who are the borrowers who are paying this interest? As they say on Reddit: !remindme 1 year.
> What serious borrower needs to pay 10% to access credit?
People who can make more than 10% trading?
Lending protocols aren't doing anything different than what banks do: allocating inactive capital to those who can make use of that capital and are willing to pay for it.
Interest rates are high because of A: market volatility, professional traders can easily make more than 10%, and B: information asymmetry, large capital pools haven't allocated to these pools.
People who can make more than 10% trading?
Lending protocols aren't doing anything different than what banks do: allocating inactive capital to those who can make use of that capital and are willing to pay for it.
Interest rates are high because of A: market volatility, professional traders can easily make more than 10%, and B: information asymmetry, large capital pools haven't allocated to these pools.
If you can reliably make more than 10% trading, you can borrow from a bank. Or Goldman Sachs. Or whoever. The current interest rate is practically 0. Anyone who is borrowing at 10% is either (a) not very bright or (b) more likely, doing something risky with their money that reputable moneymakers won't touch... probably involving the blockchain. So yeah, Ponzi.
It is super anomalous financial behavior to seek out the highest cost funding though.
Arbitragers gladly pay 10% of their risk-free income to lenders to execute an arbitrage opportunity.
It's not a ponzi.
Lookup what a ponzi scheme is.
Lookup what a ponzi scheme is.
That 10% isn't remotely risk-free. All the combined lending/defi/erc20 smart contracts are held together by paper clips and rubber bands. The popular ones have been stable so far but there is a proven history of hacks and exploits in crypto in general.
Well - money laundering, drug dealing, ICO scams...
On the positive side I think there's something like creating wealth through the power of imagination.
I mean 20 years ago there were no crypto currencies. Now on paper they are worth $2trn ($260 a head for the world's population). And lots of people can feel wealthy because they have $100k in bitcoin of whatever. And it can retain actual value in the sense that you can swap it for US$ as long as everyone doesn't sell at the same time. And where has the value come from - basically human imagination thinking the 0s and 1s are worth something. Which may be more sustainable than it sounds. Where does the value of fiat currency come from or the value of a painting in excess of the cost of making a copy of it?
I foresee a future where everyone is a crypto millionaire through the power of imagination. (Which would imply a 10000x form here?!)
On the positive side I think there's something like creating wealth through the power of imagination.
I mean 20 years ago there were no crypto currencies. Now on paper they are worth $2trn ($260 a head for the world's population). And lots of people can feel wealthy because they have $100k in bitcoin of whatever. And it can retain actual value in the sense that you can swap it for US$ as long as everyone doesn't sell at the same time. And where has the value come from - basically human imagination thinking the 0s and 1s are worth something. Which may be more sustainable than it sounds. Where does the value of fiat currency come from or the value of a painting in excess of the cost of making a copy of it?
I foresee a future where everyone is a crypto millionaire through the power of imagination. (Which would imply a 10000x form here?!)
> Where does the value of fiat currency come from
From the taxman knocking at your door. They have prisons you know and some really well armed goons.
They also control the education system and pretty much everything else and are capable of stealing your children from you and send them to die in some far away shore.
They create all kinds of myths and bullshit and we take them for granted... like national identities and currencies.
Pretty powerful system.
From the taxman knocking at your door. They have prisons you know and some really well armed goons.
They also control the education system and pretty much everything else and are capable of stealing your children from you and send them to die in some far away shore.
They create all kinds of myths and bullshit and we take them for granted... like national identities and currencies.
Pretty powerful system.
I would even argue the only reason crypto has any value is because people think they are sticking it to the man or hiding away from them. But that’s just a fantasy of course.
Governments get all of their power from the people that constitute them. When people find a way to organize themselves that is a million times more efficient, then they will be superseded.
timestamping?
Don't even need to pay any fees: https://opentimestamps.org/
Don't even need to pay any fees: https://opentimestamps.org/
https://xtz.news/adoption/gravity-a-decentralized-solution-t...
https://xtz.news/nft-news/tezos-based-nft-music-streaming-an...
https://xtz.news/nft-news/tezos-based-nft-music-streaming-an...
Well, it's something I guess.
I dunno. I mean:
* artificial intelligence -> genuine image search and speech recognition
* self-driving -> Waymo, Tesla
These other hyped technologies have produced real results that I interact with. I'm not really convinced the blockchain has... except decentralized finance. Maybe that's fine.
I dunno. I mean:
* artificial intelligence -> genuine image search and speech recognition
* self-driving -> Waymo, Tesla
These other hyped technologies have produced real results that I interact with. I'm not really convinced the blockchain has... except decentralized finance. Maybe that's fine.
Is there any material that explains NFT what it is for? I have a general idea, but to me it makes no sense e.g. what is the advantage over an invoice for something you bought.
You are asking the wrong question. "What is NFT for" question has a million convoluted and opaque answers with zero practical information.
Better question would be - "what is NFT". And the answer is JSON file with a hyperlink inside. That is all, literally nothing else is in NFT and no existing legal artifacts are any way related to selling/buying of NFTs.
Better question would be - "what is NFT". And the answer is JSON file with a hyperlink inside. That is all, literally nothing else is in NFT and no existing legal artifacts are any way related to selling/buying of NFTs.
What scares me from Ethereum is the very vibrant ecosystem of developers and builders around it.
Look back at Ethereum's history and the vast vast majority of historical projects are dead. People who invested time or money into them have lost out.
What makes it different now?
Look back at Ethereum's history and the vast vast majority of historical projects are dead. People who invested time or money into them have lost out.
What makes it different now?
Time I'm investing in developing Ethereum led me to work on state of the art cryptography, acquire advanced peer-to-peer fault tolerant computing concept, exposed me to formal verification techniques, writing code expecting an hostile environment, thinking about economic incentives and game theory.
Social networks, banking and cloud companies would love to hire for those skills.
Also central banks now want to do CBDC (Central Bank Digital Currencies), so skills acquired as dev/builders are and will stay in very high demand for the foreseeable future.
Social networks, banking and cloud companies would love to hire for those skills.
Also central banks now want to do CBDC (Central Bank Digital Currencies), so skills acquired as dev/builders are and will stay in very high demand for the foreseeable future.
You could say the same about startups on general
Are there any decentralized companies on ethereum making a steady income for people who invested in them?
Maker, YFI, Aave just to name a few. https://cryptofees.info/ lists the real cash flows of protocols.
I'd say that is a positive aspect. It means a lot of things are being tested. Most fail but at some point they might create something awesome that sticks.
> very vibrant ecosystem of developers and builders
Whenever I see someone say something like this for some blockchain, I wonder what exactly is exciting for them? Most dapps is about money and more money, I played with Ethereum before (like stress testing nodes), and would really like to know really innovating dapp these days -- I mean tech that solve existing real-world problems, not create new subjects to collect.
Whenever I see someone say something like this for some blockchain, I wonder what exactly is exciting for them? Most dapps is about money and more money, I played with Ethereum before (like stress testing nodes), and would really like to know really innovating dapp these days -- I mean tech that solve existing real-world problems, not create new subjects to collect.
Yeah 99% of Ethereums use-cases is creating erc-20 tokens. Most of which is just iterations with slight variables of something that already exists.
This statement feels straight out of 2017.
Have you looked into the Ethereum ecosystem of 2021 by any chance?
Some examples:
- You can use your tokens as collateral, borrow stablecoins and pay off your mortgage while the loan pays itself off from the interest being generated by the collateral - you do not have to pay back the loan => https://alchemix.fi/
- Borrow stablecoins at 0% interest on your collateral => https://liquity.org/
- Musicians managing royalties of their work through NFTs => https://eulerbeats.com/
And there's a lot more.
Have you looked into the Ethereum ecosystem of 2021 by any chance?
Some examples:
- You can use your tokens as collateral, borrow stablecoins and pay off your mortgage while the loan pays itself off from the interest being generated by the collateral - you do not have to pay back the loan => https://alchemix.fi/
- Borrow stablecoins at 0% interest on your collateral => https://liquity.org/
- Musicians managing royalties of their work through NFTs => https://eulerbeats.com/
And there's a lot more.
Why would a loan pay itself or why would someone give you an interest free loan when those same stablecoins pay out 20%+ interest if deposited?
You won't find any. I searched as well. Once you try to make your dapp interact with the real world you run into so many problems that it is very unclear whether it could ever be competitive compared to traditional legal/financial structures.
Thankfully DeFi doesn't require 3 days of settlement when you buy/sell an asset.
Or 2 weeks to send a SWIFT.
DeFi has a UX/UI, onboarding and fee problems, but the technology is about 2 years old and has tremendous momentum and already enabling uses cases that reqire jumping through hoops in tradFi.
Or 2 weeks to send a SWIFT.
DeFi has a UX/UI, onboarding and fee problems, but the technology is about 2 years old and has tremendous momentum and already enabling uses cases that reqire jumping through hoops in tradFi.
Ethereum may be a distributed virtual machine but currently it lacks access to data from the outside world. Naturally this places constraints on the applications that can be built: they always concern Ethereum itself.
People invented Chainlink to solve this problem: provide real world data such as "package has arrived to its destination" to smart contract software. I don't think it has delivered on its promise yet.
People invented Chainlink to solve this problem: provide real world data such as "package has arrived to its destination" to smart contract software. I don't think it has delivered on its promise yet.
The most innovation is happening in financial products. There's no way for a developer or entrepreneur to experiment building in traditional finance without the support from large financial institutions. But in DeFi, there are financial applications built by teams in India, Africa, SE Asia, etc.
If you want an example of one innovation, look at flash loans. Flash loans provide the ability to atomicly borrow infinite money for the duration of a transaction, with no collateral or credit. This money can be used for arbitraging or just to provide working capital for a complex operation. If the loan isn't repaid by the end of the transaction, the whole transaction is cancelled.
Better explanation:
https://www.youtube.com/watch?v=mCJUhnXQ76s
If you want an example of one innovation, look at flash loans. Flash loans provide the ability to atomicly borrow infinite money for the duration of a transaction, with no collateral or credit. This money can be used for arbitraging or just to provide working capital for a complex operation. If the loan isn't repaid by the end of the transaction, the whole transaction is cancelled.
Better explanation:
https://www.youtube.com/watch?v=mCJUhnXQ76s
Flash loans are not a real world application. They are just another tool needed within the cryptospace itself.
This is the problem currently. There's ten thousand teams building and building, but each one of them is building yet another library or yet another tool. Nobody has any idea how to connect the crypto economy to the real world economy.
The only applications possible are ones that you can do within the cryptospace itself, like lending one crypto against another, or creating some creative gambling game.
Unless somebody can figure out how to bridge the cryptospace to the real world economy, the whole castle of cards will eventually crumble.
This is the problem currently. There's ten thousand teams building and building, but each one of them is building yet another library or yet another tool. Nobody has any idea how to connect the crypto economy to the real world economy.
The only applications possible are ones that you can do within the cryptospace itself, like lending one crypto against another, or creating some creative gambling game.
Unless somebody can figure out how to bridge the cryptospace to the real world economy, the whole castle of cards will eventually crumble.
Flash loans themselves are not an application, it's a primitive that other applications can build on top of.
There's many applications like DeFiSaver that use flash loans to allow users to migrate debt between lending protocols without needing additional capital.
There's many applications like DeFiSaver that use flash loans to allow users to migrate debt between lending protocols without needing additional capital.
> Nobody has any idea how to connect the crypto economy to the real world economy.
How about stablecoins and exchanges? This already ties economies.
How about stablecoins and exchanges? This already ties economies.
>right now everything suffers from high gas prices but it looks like that might be solved over the next 12 months
High gas prices are solved, its just no one really seems to understand or care about the technology.
Just as example, it might cost somewhere between $50-$80 in gas to use OpenSea's "free" NFT minting smart contract. But instead you can already use an L2 solution like Polygon(Matic). I minted 1,000,000 NFTs on Polygon(Matic) just to experiment and the total gas for all 1,000,000 NFTs was less the $0.01 (I think it was $0.00018xxx) and this has the double benefit of buyers normally having to pay the same $50-80 gas fees for an NFT on Ethereum Mainnet to only pay fractions of a cent. OpenSea even has a Polygon(Matic) Beta Marketplace, but funny story maybe after 1hour after my 1,000,000 NFTs were minted I listed them for sale and OpenSea took down the Beta for maintenance for a few hours and when it went back up they removed my NFT and listing entirely from the Marketplace lol.
Enjin is another interesting platform, which I'll begin to experiment with as well because it has built in staking and burning features, but until they adopt a side chain I think it will suffer from the same high gas fees.
Point is the actual tech is there, but it really seems all about the money not the tech, and that's why people are paying high gas fees.
High gas prices are solved, its just no one really seems to understand or care about the technology.
Just as example, it might cost somewhere between $50-$80 in gas to use OpenSea's "free" NFT minting smart contract. But instead you can already use an L2 solution like Polygon(Matic). I minted 1,000,000 NFTs on Polygon(Matic) just to experiment and the total gas for all 1,000,000 NFTs was less the $0.01 (I think it was $0.00018xxx) and this has the double benefit of buyers normally having to pay the same $50-80 gas fees for an NFT on Ethereum Mainnet to only pay fractions of a cent. OpenSea even has a Polygon(Matic) Beta Marketplace, but funny story maybe after 1hour after my 1,000,000 NFTs were minted I listed them for sale and OpenSea took down the Beta for maintenance for a few hours and when it went back up they removed my NFT and listing entirely from the Marketplace lol.
Enjin is another interesting platform, which I'll begin to experiment with as well because it has built in staking and burning features, but until they adopt a side chain I think it will suffer from the same high gas fees.
Point is the actual tech is there, but it really seems all about the money not the tech, and that's why people are paying high gas fees.
This is where Ethereum gets my interest as well. The value in anything comes from a combination of scarcity AND liquidity (being able to sell it to people willing to buy it).
It seems to me that with ETH set to be the backbone behind the entire crypto-ecosystem (especially with news like Visa), it will have guaranteed liquidity built into it due to that system.
With any other cryptocurrency, the value seems to only exist from constantly trying to convince people to buy more of it, like a global pump and dump scheme. Bitcoin has such a high price because of brand recognition in that regard.
But branding is the only thing really powering it long term.
It seems to me that with ETH set to be the backbone behind the entire crypto-ecosystem (especially with news like Visa), it will have guaranteed liquidity built into it due to that system.
With any other cryptocurrency, the value seems to only exist from constantly trying to convince people to buy more of it, like a global pump and dump scheme. Bitcoin has such a high price because of brand recognition in that regard.
But branding is the only thing really powering it long term.
It will be interesting to see if interest rates in government controlled currencies and crypto currencies will stay diverged in the long run.
Without the distorting action of governments printing money, interest rates might be set by market forces in "crypto land".
This might lead to a long term situation where artificially low interest rates are paid in government controlled currencies, but market prices are paid in crypto currencies.
Or will cheap interest rates in government controlled currencies somehow bring down the interest rates in crypto currencies?
The 10 year yield of bonds in Europe is at 0%. While US bonds are currently at 1.5%. This might be an indicator, that rates in one currency will not completely control rates in other currencies.
Without the distorting action of governments printing money, interest rates might be set by market forces in "crypto land".
This might lead to a long term situation where artificially low interest rates are paid in government controlled currencies, but market prices are paid in crypto currencies.
Or will cheap interest rates in government controlled currencies somehow bring down the interest rates in crypto currencies?
The 10 year yield of bonds in Europe is at 0%. While US bonds are currently at 1.5%. This might be an indicator, that rates in one currency will not completely control rates in other currencies.
I think the primary reason interest rates are high in crypto lending right now (also on USD stablecoins) is leveraged speculation - people using crypto as collateral to leverage their crypto positions higher (and/or yield farm) and are prepared to pay a relatively high interest rate for it (~10% on stablecoins) because the expected gains are a fair bit higher.
I don’t expect this will last forever
I don’t expect this will last forever
Anecdotally many crypto holders prefer to not liquidate their crypto positions but instead take out loans via BlockFi to purchase hard assets like real estate. With cash in hand and now a property, they can get a cash out refi and the crypto loan is not a taxable event since the crypto was just collateral.
Like this?
0: Holder has ETH
1: Holder borrows Tether, provieds ETH as collateral
2: Holder uses Tether to buy a house
3: Holder borrows Dollar, provides house as collateral
4: Holder buys Tether with Dollar
5: Holder pays back Tether, gets back ETH.
6: Holder now has ETH + House + Dollar Dept
If so, why couldn't they lend the dollars to buy the house in the first place? The bank which lends the dollars certainly could make a contract that the dollars only can be used to buy the house?
0: Holder has ETH
1: Holder borrows Tether, provieds ETH as collateral
2: Holder uses Tether to buy a house
3: Holder borrows Dollar, provides house as collateral
4: Holder buys Tether with Dollar
5: Holder pays back Tether, gets back ETH.
6: Holder now has ETH + House + Dollar Dept
If so, why couldn't they lend the dollars to buy the house in the first place? The bank which lends the dollars certainly could make a contract that the dollars only can be used to buy the house?
Real estate financing is primarily done by lenders with very traditional underwriting practices that don't factor in crypto or avoid it entirely. Even HNI/private banking doesn't consider crypto part of a liquid portfolio. You can go to Interactive Brokers and get a 1.x% rate with 2x (margin) or 5x (portfolio margin) but that's off non-crypto. To get that same leverage with crypto, you can put in a down payment for real estate (20% down) in 5 properties for 5x leverage. BlockFi/Tether etc. make that liquidity possible without liquidation. Feel free to DM me for more conversation on this topic.
Rates are lower on margin loan, and they’re easier to get compared to a proper mortgage (assuming, you know, you have value assets to borrow against)
Rates might be lower but they're not usually fixed. They're easier to get assuming your liquidity is in equities versus crypto or even a stable income. There's a reason mortgage financing is still more prevalent than margin loans despite what you've stated which are inherent benefits.
You say a bank loans money to someone who owns a certain house, but not to someone who uses the money to buy the exact same house?
Yep this is the other use case for crypto lending
You say that one can create leverage by borrowing? How does that work?
Is it a contract like "You borrow me 1 ETH and I will pay back 1.1 ETH in a year. Except when X happens, then I will pay back 2 ETH"?
If so, what is X?
Is it a contract like "You borrow me 1 ETH and I will pay back 1.1 ETH in a year. Except when X happens, then I will pay back 2 ETH"?
If so, what is X?
The leverage is speculation using borrowed money. See: https://www.blueleaf.com/articles/how-leverage-works-in-inve....
That does not answer my question: How a smart contract can implement lending in a way that both parties are satisfied:
- The lender gets their money back plus interest.
- The borrower makes a profit if the price of the borrowed currency goes up.
- The lender gets their money back plus interest.
- The borrower makes a profit if the price of the borrowed currency goes up.
Majority of the lending platforms to date are centralized and custodial solutions
Check out Aave or Compound. You basically use your crypto as collateral, and do whatever you want with the borrowed money. If you want to take the borrowed money and get even more (leveraged) exposure to crypto, you can. You don’t pay back more than the borrowed capital plus interest.
https://docs.aave.com/faq/borrowing
https://docs.aave.com/faq/borrowing
Since ETH staking returns do represent a (sort of) risk free rate for ETH denominated loans, low fiat rates would pull down on those rewards, if the exchange rate volatility comes enough for people to stomach the currency risk.
The same sort of flows balance exchange rates and interest rates among national currencies, though as you point out, sufficient risks and controls abound to prevent complete parity between the rates.
I’d challenge the notion that one side is paying market rates, and one isn’t, at least in nominal terms. Bond purchases and ETH stakes are both market transactions at the prevailing rate, just with different structural forces in play.
The same sort of flows balance exchange rates and interest rates among national currencies, though as you point out, sufficient risks and controls abound to prevent complete parity between the rates.
I’d challenge the notion that one side is paying market rates, and one isn’t, at least in nominal terms. Bond purchases and ETH stakes are both market transactions at the prevailing rate, just with different structural forces in play.
I agree completely. I think the greatest value proposition of non-government money (e.g. gold, bitcoin) — at least in the long run — is the ability to escape from zero/negative interest rates.
I also agree that the different between EUR and USD bond yields seems to indicate that there exists no reliable way to arbitrage the spread in bond yields between different currencies (or, at least, that there exists a certain spread beneath which it's not profitable).
I also agree that the different between EUR and USD bond yields seems to indicate that there exists no reliable way to arbitrage the spread in bond yields between different currencies (or, at least, that there exists a certain spread beneath which it's not profitable).
You're comparing a risk-free rate (government bonds) with a rate on risky investments. Not really comparable at all. You can also find high-yield bonds (aka junk bonds) denominated in USD.
Also real interest rates are set by the market not governments. Monetary policy has, at best, only small effects on real rates (in theory it should have none).
Also real interest rates are set by the market not governments. Monetary policy has, at best, only small effects on real rates (in theory it should have none).
> You're comparing a risk-free rate (government bonds)
> with a rate on risky investments.
I don't think so. What is the "risky investment" here?
I compared lending of different currencies. In the case of Euros or Dollars, the lender is a government. In the case of crypto, the lender is a smart contract. Both are assumed to be reliable.
I don't think so. What is the "risky investment" here?
I compared lending of different currencies. In the case of Euros or Dollars, the lender is a government. In the case of crypto, the lender is a smart contract. Both are assumed to be reliable.
If your smart contact is truly reliable and anyone can lend on it at a rate of their choosing, and all loans are fully and perfectly collateralized, the natural interest rate is exactly the risk free rate. As above, for ETH I think that ends being the return on staking, minus the costs of actually running a staking node - so pretty close to zero?
The last resort of the US, UK, etc. governments is to print money if they really want to avoid defaulting on their debt. Can smart contracts print money? Surely there must be some way for the counterparty in the contract to default.
"Defaulting" in crypto means the collateral goes from the borrower to the lender. The collateral is always more valuable than the borrowed asset. Otherwise, all borrowers would "default" all the time. As there is no other downside to it than to lose your collateral.
So, the borrower starts with X BTC. They post X BTC as collateral and borrow X-y BTC (where y > 0). Once the loan is paid off, they get the collateral back. This means they end up with X BTC minus the interest paid on X-y. Why would anyone do that?
I am not sure if lending makes sense if the collateral is the same asset that is borrowed.
A more typical example I can envision:
Someone owns land in Decentraland. The land is an NFT on the Ethereum blockchain. To make profits from the land they need to put a hotel on top of it. But they don't have the means to buy/build the hotel. So they lend Decentracoins (some other asset on the Ethereum blockchain) and provide the land as collateral.
If all goes well, the borrower buys/builds a hotel with the decentracoins. Makes more decentracoins from visitors. Pays back their debt.
If it does not work out, the land goes to the lender.
A more typical example I can envision:
Someone owns land in Decentraland. The land is an NFT on the Ethereum blockchain. To make profits from the land they need to put a hotel on top of it. But they don't have the means to buy/build the hotel. So they lend Decentracoins (some other asset on the Ethereum blockchain) and provide the land as collateral.
If all goes well, the borrower buys/builds a hotel with the decentracoins. Makes more decentracoins from visitors. Pays back their debt.
If it does not work out, the land goes to the lender.
> I am not sure if lending makes sense if the collateral is the same asset that is borrowed.
It doesn't. And if the collateral is a different asset, there is no certainty that the value of the collateral exceeds the value of the principal. So there's a risk involved and that explains the premium over the risk-free rate. It's got nothing to do with the fact that the loan is denominated in some cryptocurrency.
It doesn't. And if the collateral is a different asset, there is no certainty that the value of the collateral exceeds the value of the principal. So there's a risk involved and that explains the premium over the risk-free rate. It's got nothing to do with the fact that the loan is denominated in some cryptocurrency.
> It doesn't
Proof needed. I can in fact think of counter examples:
Say there is a DAO that gives more voting power if you own more ETH. In that situation, it might make sense to borrow 900 in ETH with 1000 ETH collateral. Then you make your vote on the DAO with a power of 1900. And pay back 910 in ETH to the lender. The vote on the DAO might trigger an action that is worth more than the 10 ETH you paid in interest. For example if you run a company and the vote on the DAO was to buy a service from your company.
Proof needed. I can in fact think of counter examples:
Say there is a DAO that gives more voting power if you own more ETH. In that situation, it might make sense to borrow 900 in ETH with 1000 ETH collateral. Then you make your vote on the DAO with a power of 1900. And pay back 910 in ETH to the lender. The vote on the DAO might trigger an action that is worth more than the 10 ETH you paid in interest. For example if you run a company and the vote on the DAO was to buy a service from your company.
> it might make sense to borrow 900 in ETH with 1000 ETH collateral. Then you make your vote on the DAO with a power of 1900
No, you would vote on the DAO with a power of 900, because your original 1000 ETH collateral is being held by the lending protocol
No, you would vote on the DAO with a power of 900, because your original 1000 ETH collateral is being held by the lending protocol
Not necessarily. There are mulitple ways it could work.
Two examples:
The DAO could support the lending protocol. Counting your assets in the lending protocol towards your voting power.
The lending protocol could support the DAO. Not allowing you to withdraw you collateral but allowing you to signal something to the DAO.
Two examples:
The DAO could support the lending protocol. Counting your assets in the lending protocol towards your voting power.
The lending protocol could support the DAO. Not allowing you to withdraw you collateral but allowing you to signal something to the DAO.
> What is the "risky investment" here?
Well, you tell me. Where do the profits come from?
> In the case of crypto, the lender is a smart contract.
That doesn't make sense. The smart contract is a contract, that is, an agreement between two or more parties. An agreement is not a lender. The lender is one of the parties.
Well, you tell me. Where do the profits come from?
> In the case of crypto, the lender is a smart contract.
That doesn't make sense. The smart contract is a contract, that is, an agreement between two or more parties. An agreement is not a lender. The lender is one of the parties.
> The lender is one of the parties
The "parties" do not know each other. And it does not matter who put the contract up, who put assets in and who borrowed assets from the contract.
Because everything is in the smart contract. Even the assets. Are you aware that Ethereum contracts hold assets?
The "parties" do not know each other. And it does not matter who put the contract up, who put assets in and who borrowed assets from the contract.
Because everything is in the smart contract. Even the assets. Are you aware that Ethereum contracts hold assets?
Let's pretend the lender is "smart contract" (even though it's not). You lend X to the smart contract, and after a while the smart contract pays you X+y. Where does the y come from?
> even though it's not
We should sort this out first. It does not make sense to discuss higher level concepts if we disagree on lower level concepts.
We should sort this out first. It does not make sense to discuss higher level concepts if we disagree on lower level concepts.
the risk-free bonds have failed numerous times. Often they wiped out investors entirely.
Full list: https://en.wikipedia.org/wiki/List_of_sovereign_debt_crises
They cannot print value, only paper.
Full list: https://en.wikipedia.org/wiki/List_of_sovereign_debt_crises
They cannot print value, only paper.
And you'll find these failed governments bonds were paying a considerable risk premium, i.e. a spread over the risk-free rate.
Not necessarily. Since the government can print the money they lend, they can dictate the risk premium. They can keep it as low as they want.
Italy and some other European countries are basically broke. But they pay less interest than the USA.
Italy and some other European countries are basically broke. But they pay less interest than the USA.
The risk premium is the interest rate spread that investors demand. Not clear how the government can "dictate it" by printing money.
The government prints money and buys government bonds with it. And other assets. When you have infinite amounts of money, you can dictate the risk premium.
> When you have infinite amounts of money, you can dictate the risk premium.
But how? If you're an investor who is considering buying government bonds, how can the government dictate the interest rate that you are willing to accept in return for buying the bonds?
But how? If you're an investor who is considering buying government bonds, how can the government dictate the interest rate that you are willing to accept in return for buying the bonds?
read up on yield curve control.
https://www.stlouisfed.org/on-the-economy/2020/august/what-y...
Basically: central bank has infinite money and buys all the debt at 0%, and outbids everyone else.
Simple.
Basically: central bank has infinite money and buys all the debt at 0%, and outbids everyone else.
Simple.
The government is an investor. If the government buys enough bonds at X% interest rate, that is the market rate.
Sorry, that's not how it works. The governments runs an auction where the bonds are sold to investors. That sets the market rate. The government would not buy its own bonds in the auction (it wouldn't make sense) and cannot force investors to buy the bonds at a particular rate.
In Europe, the government does buy its own bonds. Via the central bank. They print the money. Hold it for a few days. Then buy government bonds with it.
Read what the european central bank (ECB) writes about it:
https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1956.en.pdf
https://www.ecb.europa.eu/mopo/implement/pepp/html/index.en....
Search for "government bonds" in these papers.
Read what the european central bank (ECB) writes about it:
https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1956.en.pdf
https://www.ecb.europa.eu/mopo/implement/pepp/html/index.en....
Search for "government bonds" in these papers.
The central bank buys bonds in the secondary market, and any effect on the risk premium is only indirect (investors perceive the bonds as being safer). This is completely different from the government "dictating the risk premium". The risk premium is the spread deemed necessary by the market to compensate for credit risk, and as such it can't be dictated by anyone.
Yet, i've seen defi protocols that tried to fix the rate + maturity of said "bonds" they were offering and be complete baffled why demand for them changed when market conditions changed… wish there were more voices like yours in the sea of fecal matter floating around in the ecosystem…
Thank you for wading in and trying to speak to them sensibly
The fact that something is scarce doesn't make it a store of value. Scarce simply means is in short supply, but prices aren't determined by supply alone, they are determined by supply and demand. Moreover, if an asset is in fixed supply, then its price is determined entirely by the demand. This means such an asset will only be a store of value if the demand for the asset remains strong over a long period of time, which is something the asset issuer/producer has zero influence on.
The money behind big tech has mastered manipulating demand and that is exactly what you are seeing in the Ethereum/NFT ecosystem.
It is one giant fraud bankrolled by unlimited capital that can artificially increase prices at which point there becomes demand from people in fear of missing out, once the early capital has the suckers locked in the prices plateau at first as the capital stops buying and driving the price up, and then begins a steep crash as they cash out and lock in the gains, this only causes fear and panic among the late entries that made investments at the peak which they couldn't afford to lose...rinse and repeat.
The NFTs may be even more blatant and egregious than the ERC20 coins in terms of fake sales driving up interest, media and demand for shit no regular investor will ever flip. A lot of it is just transparent fraud and money laundering, with the people involved not even shying away from it but openly justifying it on the basis they feel the stock market and art collectors have always engaged in the same misconduct.
Take Elon Musk, openly pumping Doge...I'm not judging, I get the humor in it, but a lot of people have been crushed over the years in the crypto bubbles, yesterday was a prime example where Elon was likely the sole cause of Doge exploding in value (maybe 5x in a few days and 100x over a month) and as the big money way slowly cashing out these massive media campaigns were behind a marketing scam of "DogeDay" essentially making their killing on the backs of the poor uneducated late investors. One would hope his Tweets shined a bright light on the dystopia of it all, but it seems everyone is either so greedy or in such bad positions financially they would rather take part.
My guess is now that they have reaped their profits at the expense of the little guy, they will buy back in with the profits and we should see another pump following the -25% DogeDay scam.
It is one giant fraud bankrolled by unlimited capital that can artificially increase prices at which point there becomes demand from people in fear of missing out, once the early capital has the suckers locked in the prices plateau at first as the capital stops buying and driving the price up, and then begins a steep crash as they cash out and lock in the gains, this only causes fear and panic among the late entries that made investments at the peak which they couldn't afford to lose...rinse and repeat.
The NFTs may be even more blatant and egregious than the ERC20 coins in terms of fake sales driving up interest, media and demand for shit no regular investor will ever flip. A lot of it is just transparent fraud and money laundering, with the people involved not even shying away from it but openly justifying it on the basis they feel the stock market and art collectors have always engaged in the same misconduct.
Take Elon Musk, openly pumping Doge...I'm not judging, I get the humor in it, but a lot of people have been crushed over the years in the crypto bubbles, yesterday was a prime example where Elon was likely the sole cause of Doge exploding in value (maybe 5x in a few days and 100x over a month) and as the big money way slowly cashing out these massive media campaigns were behind a marketing scam of "DogeDay" essentially making their killing on the backs of the poor uneducated late investors. One would hope his Tweets shined a bright light on the dystopia of it all, but it seems everyone is either so greedy or in such bad positions financially they would rather take part.
My guess is now that they have reaped their profits at the expense of the little guy, they will buy back in with the profits and we should see another pump following the -25% DogeDay scam.
There are people who have been bankrupted by rugpulls and sharp selloffs. All of this is just going to invite more regulation and completely strangle the industry.
As usual, the greediest have to ruin it all for the rest of us.
As usual, the greediest have to ruin it all for the rest of us.
I struggle to have any sympathy for "the little guy".
Noone's lying to them, noone's defrauding them, noone's stealing anything or embezzling from them.
It's just greed, plain and simple. If you pile into a get-rich-quick scheme but end up holding the bag in, then more fool you.
I still think it should probably be regulated to prevent idiots from losing their life savings. But I won't pretend the losers are ethically any different from the winners. No matter whether you're early or late to the party, you're all just hucksters looking for a quick buck from a pump-and-dump.
Noone's lying to them, noone's defrauding them, noone's stealing anything or embezzling from them.
It's just greed, plain and simple. If you pile into a get-rich-quick scheme but end up holding the bag in, then more fool you.
I still think it should probably be regulated to prevent idiots from losing their life savings. But I won't pretend the losers are ethically any different from the winners. No matter whether you're early or late to the party, you're all just hucksters looking for a quick buck from a pump-and-dump.
This is such a simplistic view of “the little guy”. The dollar system is set up such that they have to ‘invest’ or else they will never be able to afford a house. Savings will bankrupt them. Stocks are meaningless, just handing your money to rich people that will never give it back in hopes that you can sell it for more later. But the whole system looks like it’s in free fall, so that doesn’t seem likely. Crypto would have zero value if normal people weren’t scared and distrustful. I can’t recall a market mania that didn’t start with massive rises in home prices.
> Crypto would have zero value if normal people weren’t scared and distrustful.
That implies cryptocurrencies provide no value by themselves and is simply false. Ethereum is essentially a distributed virtual machine that anyone can pay to use. Monero offers complete financial privacy.
That implies cryptocurrencies provide no value by themselves and is simply false. Ethereum is essentially a distributed virtual machine that anyone can pay to use. Monero offers complete financial privacy.
What sort of operations are people running on the Ethereum VM?
I've seen interest bearing crypto accounts. You can get 6% APY on stablecoins. Any project that promises you more than that is calculating APY for the current day or hour. 40% APY for less than a single day is just misleading advertisement.
Although I am generally against cryptocurrencies, I cannot be against the idea of building a decentralized banking system (cryptocurrencies are merely cash). I mean, if we get to do it with fiat, they surely deserve to do it with their cryptocurrencies.
Although I am generally against cryptocurrencies, I cannot be against the idea of building a decentralized banking system (cryptocurrencies are merely cash). I mean, if we get to do it with fiat, they surely deserve to do it with their cryptocurrencies.
Currently the smart contract software projects are focused on decentralized finance since the only input necessary for that is ETH currency. New tokens, decentralized exchanges and so on.
People created Chainlink to bring real world data inputs to Ethereum software. Data such as "package has arrived to its destination". It hasn't delivered on its promise yet unfortunately. If it ever does, all bets will be off.
People created Chainlink to bring real world data inputs to Ethereum software. Data such as "package has arrived to its destination". It hasn't delivered on its promise yet unfortunately. If it ever does, all bets will be off.
I have multiple decentralized websites and even a search engine on IPFS (the p2p web3 protocol)
>Ethereum is essentially a distributed virtual machine that anyone can pay to use.
...that is unbelievably slow, limited, difficult to use, and makes it impossible to fix bugs.
It's absolutely fascinating in principle, yes. But in practice it's a solution in search of a problem.
...that is unbelievably slow, limited, difficult to use, and makes it impossible to fix bugs.
It's absolutely fascinating in principle, yes. But in practice it's a solution in search of a problem.
> that is unbelievably slow, inefficient, and makes it impossible to fix bugs
I don't dispute that. The real innovation lies in the decentralization. Unfortunately, decentralization is threatened by centralized mining operations who resist changes to the network such as migration to proof of stake. Bitcoin also suffers from the same problem with miners effectively controlling the protocol and as a result the coin has remained static for a long time.
Monero seems to be having success avoiding the influence of miners. They adopted ASIC and GPU resistant algorithms which makes it viable to mine XMR on normal CPUs, allowing more people to participate and as a result making the coin more decentralized.
I don't dispute that. The real innovation lies in the decentralization. Unfortunately, decentralization is threatened by centralized mining operations who resist changes to the network such as migration to proof of stake. Bitcoin also suffers from the same problem with miners effectively controlling the protocol and as a result the coin has remained static for a long time.
Monero seems to be having success avoiding the influence of miners. They adopted ASIC and GPU resistant algorithms which makes it viable to mine XMR on normal CPUs, allowing more people to participate and as a result making the coin more decentralized.
I’ll be the first one to say that crypto is often the superior system. But only due to the threat. A threat I happen to believe is very dangerous. Any security model only has value in the presence of a threat model. Other than that it’s just inefficient.
Indeed. The threat is real and will continue to be real for as long as governments exist. Maybe the threat is centralized authorities in general.
My country experienced runaway inflation in the 1990s. In a desperate attempt to stop it, the president just froze everyone's bank accounts. The government took away everyone's money out of nowhere. So I don't really care how much energy cryptocurrency consumes. If it puts an end to government stupidity it's worth it. The more they hate cryptocurrency the better -- it means they can't control it.
My country experienced runaway inflation in the 1990s. In a desperate attempt to stop it, the president just froze everyone's bank accounts. The government took away everyone's money out of nowhere. So I don't really care how much energy cryptocurrency consumes. If it puts an end to government stupidity it's worth it. The more they hate cryptocurrency the better -- it means they can't control it.
>The dollar system is set up such that they have to ‘invest’ or else they will never be able to afford a house. Savings will bankrupt them.
This is what happens when inflation is low, yet people consider inflation the devil. If the Fed could actually hit inflation goals this whole farce would be over. We'd be at the end of the long term debt cycle and a whole lot of fake value would disappear into thin air and after all the bad debt and bad companies have been cleaned up, there would be enough room for productive companies.
This is what happens when inflation is low, yet people consider inflation the devil. If the Fed could actually hit inflation goals this whole farce would be over. We'd be at the end of the long term debt cycle and a whole lot of fake value would disappear into thin air and after all the bad debt and bad companies have been cleaned up, there would be enough room for productive companies.
>It's just greed, plain and simple.
Seeing someone pay off their student loans or their credit cards on an income similar or lower than yours by “investing” in a ICO at the right time and trying to find the next opportunity is greed to you?
I’d say the little guy is desperate to get out underneath whatever has them in dire straights to reasonably think a “gamble” as rational.
Seeing someone pay off their student loans or their credit cards on an income similar or lower than yours by “investing” in a ICO at the right time and trying to find the next opportunity is greed to you?
I’d say the little guy is desperate to get out underneath whatever has them in dire straights to reasonably think a “gamble” as rational.
Are you asserting that lower income people cannot be as greedy as higher income people?
The common definition of greed would be the selfish desire of more than one needs, the "little guy" by definition that us taken by investment scams or mass Crypto pump and dump scams usually isn't seeking more than they need, but in such a desperate and dire financial and economic position they are usually just attempting to gain some footing to put them on level ground. At the end of the day the scams exist because they work, whether you blame it on their the greed of the victim or it is just an act of desperation is irrelevant, the conduct that can and should be regulated is that of the scammers.
Greed is the desire to accumulate wealth for its own sake. I don't think it makes sense to characterize a low-income person as greedy for trying to improve their situation somewhat.
>It's just greed, plain and simple.
I get that position, but it is a lot more than greed...or maybe a lot less.
It is uneducated investors that see something they don't understand that is unregulated, easily accessible and being marketed to them in ways they should be considered lying and defrauding.
Again the fact that you have a CEO of a publicly traded company constantly Tweeting Doge to the Moon...its easy to say well you bought in thats just greed, fine, but its dystopian as hell.
I get that position, but it is a lot more than greed...or maybe a lot less.
It is uneducated investors that see something they don't understand that is unregulated, easily accessible and being marketed to them in ways they should be considered lying and defrauding.
Again the fact that you have a CEO of a publicly traded company constantly Tweeting Doge to the Moon...its easy to say well you bought in thats just greed, fine, but its dystopian as hell.
Since 1971 essentially all gains in wealth in the first world have been captured by the very wealthy, who have enjoyed an acceleration feedback loop between their capture of wealth, and capture of government, hence all effective means on checking that accumulation.
Any analysis that does not start with this is either complicit, intentionally or merely because the author has enoyed incidental residual benefit; or ignorant.
There is no mystery why there is an aura of mingled desperation, FOMO, and nihilism; to focus on the "greed" is to ignore what is animating Hail Mary attempts to finding a short path to stability, is that every traditional long path has been quietly consistently dismantled.
Better crypto than Q. But it won't stop what's coming.
What's coming is dramatically increased domestic unrest driven by the attempt to use the technologies so many here are helping build, to keep a pressure lid on and further the devolution into a two-class society.
Enjoying the dregs of the 1%? Set the autopilot for Mars, just don't take your hands off the wheel.
Any analysis that does not start with this is either complicit, intentionally or merely because the author has enoyed incidental residual benefit; or ignorant.
There is no mystery why there is an aura of mingled desperation, FOMO, and nihilism; to focus on the "greed" is to ignore what is animating Hail Mary attempts to finding a short path to stability, is that every traditional long path has been quietly consistently dismantled.
Better crypto than Q. But it won't stop what's coming.
What's coming is dramatically increased domestic unrest driven by the attempt to use the technologies so many here are helping build, to keep a pressure lid on and further the devolution into a two-class society.
Enjoying the dregs of the 1%? Set the autopilot for Mars, just don't take your hands off the wheel.
Another thing to keep in mind is that people can gamble for fun while knowing their limits. At least with GameSpot, reporters didn’t seem to be finding ordinary investors in significant financial trouble?
Sometimes the gambling is aggressively dumb but the marks still walk away pretty much okay, like someone who had a fun time losing money on rigged carnival games.
Sometimes the gambling is aggressively dumb but the marks still walk away pretty much okay, like someone who had a fun time losing money on rigged carnival games.
100% agree. ERC20 have matured to the point where some valuable projects actually exists. There is probably some shady business around NTFs today and the non-shady business portion of the market is very small.
imho, NFTs have lots of potential to facilitate purchase and sell of real world items (buy a car with a USDC transaction to a smart contract). This is the NFT "killer app" to me
imho, NFTs have lots of potential to facilitate purchase and sell of real world items (buy a car with a USDC transaction to a smart contract). This is the NFT "killer app" to me
Not sure why you were downvoted on this comment.
The city of Miami is putting together a investigating committee/task force to see how public services can incorporate blockchain.
I think it will be implemented, not at the City but the County level, for recording property Deeds. Though 1 year, 5 years, 10 years, its anyone's guess.
The NFT killer app, the writing is on the wall and it will be stocks/stock exchange.
The city of Miami is putting together a investigating committee/task force to see how public services can incorporate blockchain.
I think it will be implemented, not at the City but the County level, for recording property Deeds. Though 1 year, 5 years, 10 years, its anyone's guess.
The NFT killer app, the writing is on the wall and it will be stocks/stock exchange.
You're right, prices are determined by supply and demand but that's exactly what this article is about.
Ethereum has always had demand (due to the growing ecosystem of DeFi, NFT, etc) but the supply was arbitrary.
What's coming with EIP-1559 fixes this by directly linking the supply (or rather burning of tokens) to the demand of the network.
Ethereum has always had demand (due to the growing ecosystem of DeFi, NFT, etc) but the supply was arbitrary.
What's coming with EIP-1559 fixes this by directly linking the supply (or rather burning of tokens) to the demand of the network.
Exactly, Ethereum is a better Store of Value than Bitcoin, not only because it is scarce, but because it provides utility, which creates demand.
People need ETH for:
* Paying transaction fees to use the network. For example, Visa is now settling payments with card issuers using USDC on Ethereum, so Visa needs to pay these fees with ETH.
* Collateral in financial applications: Over 11 million ETH (over $24 billion) have been locked as collateral in various financial protocols
* Staking & validating: In the same way that Bitcoin miners must purchase mining hardware to earn money, Eth2 validators must purchase ETH to earn staking rewards
People need ETH for:
* Paying transaction fees to use the network. For example, Visa is now settling payments with card issuers using USDC on Ethereum, so Visa needs to pay these fees with ETH.
* Collateral in financial applications: Over 11 million ETH (over $24 billion) have been locked as collateral in various financial protocols
* Staking & validating: In the same way that Bitcoin miners must purchase mining hardware to earn money, Eth2 validators must purchase ETH to earn staking rewards
No.
The greatest motivation for Crypto success are hatred and fear.
BTC is succeeding because people hate/fear Central Banks printing money , so people love BTC and hate Central Banks.
Ethereum doesn't put itself up against the printing of money but against companies instead. Google, Apple, Spotify etc. People don't hate those companies and to the extent that they do....they manifest their hate by asking Government to tax them more, not migrating to a super hard to use and super costly decentralized platform to undercut their power. The consumer doesn't think in those terms.
The greatest motivation for Crypto success are hatred and fear.
BTC is succeeding because people hate/fear Central Banks printing money , so people love BTC and hate Central Banks.
Ethereum doesn't put itself up against the printing of money but against companies instead. Google, Apple, Spotify etc. People don't hate those companies and to the extent that they do....they manifest their hate by asking Government to tax them more, not migrating to a super hard to use and super costly decentralized platform to undercut their power. The consumer doesn't think in those terms.
If you think the point of decentralized systems are to ONLY replicate Google / Apple / Spotify services but in a decentralized manner, then you're mistaken.
When the internet came along, it wasn't to only replicate the Post-office or to just make mails faster. The internet enabled a lot of things you couldn't even predict at that time (or perhaps some could, if they truly understood the tech).
There are lots of things that the blockchain enables that you just cannot do in the traditional world even today. Couple of examples:
- You can use your tokens as collateral, borrow stablecoins and pay off your mortgage while the loan pays itself off from the interest being generated by the collateral - you do not have to pay back the loan => https://alchemix.fi/
- (Borrowed from another user in this thread) Flash loans provide the ability to atomicly borrow infinite money for the duration of a transaction, with no collateral or credit. This money can be used for arbitraging or just to provide working capital for a complex operation. If the loan isn't repaid by the end of the transaction, the whole transaction is cancelled. => https://www.youtube.com/watch?v=mCJUhnXQ76s
There's clearly going to be a lot more use-cases in the future. Finance is only the first field which is getting explored at the moment.
When the internet came along, it wasn't to only replicate the Post-office or to just make mails faster. The internet enabled a lot of things you couldn't even predict at that time (or perhaps some could, if they truly understood the tech).
There are lots of things that the blockchain enables that you just cannot do in the traditional world even today. Couple of examples:
- You can use your tokens as collateral, borrow stablecoins and pay off your mortgage while the loan pays itself off from the interest being generated by the collateral - you do not have to pay back the loan => https://alchemix.fi/
- (Borrowed from another user in this thread) Flash loans provide the ability to atomicly borrow infinite money for the duration of a transaction, with no collateral or credit. This money can be used for arbitraging or just to provide working capital for a complex operation. If the loan isn't repaid by the end of the transaction, the whole transaction is cancelled. => https://www.youtube.com/watch?v=mCJUhnXQ76s
There's clearly going to be a lot more use-cases in the future. Finance is only the first field which is getting explored at the moment.
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People hate Robinhood after they blocked users from trading. Decentralized exchanges like Uniswap are impossible to shut down.
Utility? The transaction fees are around $30 USD now.
Presumably someone receives more than $30 in value from these transactions, otherwise they wouldn't be willing to pay them.
No one is contradicting a basic tautology like that.
What do you think people are using those transactions for? The average transaction value is of $5,000 USD.
https://bitinfocharts.com/comparison/transactionvalue-eth.ht...
Do you think people are making these transactions for anything other than speculation? You said value, I said utility.
What do you think people are using those transactions for? The average transaction value is of $5,000 USD.
https://bitinfocharts.com/comparison/transactionvalue-eth.ht...
Do you think people are making these transactions for anything other than speculation? You said value, I said utility.
Fees are a function of supply & demand.
High fees means there's tons of demand to use the chain.
Yes, it sucks for small users who are priced-out, but scaling solutions such as rollups should be launching within the next few weeks.
High fees means there's tons of demand to use the chain.
Yes, it sucks for small users who are priced-out, but scaling solutions such as rollups should be launching within the next few weeks.
It isn't small users who are priced out so much as almost every use case other than speculation.
Anything that does not allow more transaction throughput doesn't help.
Anything that does not allow more transaction throughput doesn't help.
Imo ETH is not a better store of value than bitcoin today because of hashpower supremacy and therefore security btc enjoys. Even when ethereum goes full on PoS, it will still be dependant on bitcoin.
>they are determined by supply and demand
You are correct, but only in theory: this requires the precondition that people are rational economic actors.
In practice, people are weird, and the scarcity of supply creates a demand.
There is therefore a weird feedback loop between the supply and the demand, and scarcity alone is enough to create "value".
Examples:
You are correct, but only in theory: this requires the precondition that people are rational economic actors.
In practice, people are weird, and the scarcity of supply creates a demand.
There is therefore a weird feedback loop between the supply and the demand, and scarcity alone is enough to create "value".
Examples:
- Beanie babies
- Magic the gathering cards
- Pokemon cards
- Baseball cards
- DaVinci paintings (where anyone can have an 8k x 8k exact reproduction, but the original is worth a fortune)
- etc...> There is therefore a weird feedback loop between the supply and the demand, and scarcity alone is enough to create "value".
Yes. Temporarily. And a much less weird feedback loop is enough to annihilate all of this “value” at some later point in time (the “crash”).
Yes. Temporarily. And a much less weird feedback loop is enough to annihilate all of this “value” at some later point in time (the “crash”).
A good example of this is stamp collecting. A grandparent carefully collected stamp albums for his grandchildren. They are now pretty much worthless, because the fashion for stamp collecting has gone. I hope he enjoyed the process of collecting.
Is that true? Time to buy the dip in stamps!
Then, I can issue NFTs for my old stamps.
Then, I can issue NFTs for my old stamps.
Scarcity alone is definitely not enough to create value. The one piece of artwork I've made in my life is a scarce resource, but that doesn't mean I have people buying it up like its an NFT.
This is true, you need demand too. But NFTs make scarcity possible in a domain in which it was not possible before (digital art, for example). You have demand from collectors and speculators who want to create a market for "scarce" digital art. You have supply from creators who are quite happy to meet that demand. And you have NFTs, a way to make digital art scarce (for some definition of scarce.)
No, the scarcity alone isn’t enough. There has to be some existing interest to make the “exclusivity” something people actually care about.
Each one of my paintings is completely unique and there are very few. Nobody cares and wouldn’t pay any premium for them.
Each one of my paintings is completely unique and there are very few. Nobody cares and wouldn’t pay any premium for them.
> DaVinci paintings
And there's the demand -- money laundering and smuggling ill-gotten gains (nazis had a lot of paintings)
And there's the demand -- money laundering and smuggling ill-gotten gains (nazis had a lot of paintings)
The point is that customers are already paying a lot of fees in Ethereum for financial services on the blockchain. Right now that money goes to run a lot of powerplants and gpu farms but will sometime in the future go to Ethereum staker. PoS coins are a combination of money, store of value and investment in a financial service "cloud".
It will actually not be going to the Ethereum staker, the "base-fee" is going to be burned (removed from supply) and no one gets it, that's what EIP-1559 does (expected to arrive in the July London hard-fork)
To add to this, the overall issuance of ETH yearly is going to reduce from about ~ 4+ Million ETH in the PoW model to about ~ 1.x Million ETH in the PoS model, because the PoS security does not require as much issuance.
To add to this, the overall issuance of ETH yearly is going to reduce from about ~ 4+ Million ETH in the PoW model to about ~ 1.x Million ETH in the PoS model, because the PoS security does not require as much issuance.
You can only burn a little since:
1.)If you burn too much the whole pricing and ordering mechanism for operations does not work any more. Burning is only going to lead to big players in mining/staking and consumers making direct side arrangements.
2.) There is less incentive to stake since burning benefits all regardless if you stake or not. Its essentially a stock buyback. But sure you still have the inflationary block generation as rewards.
1.)If you burn too much the whole pricing and ordering mechanism for operations does not work any more. Burning is only going to lead to big players in mining/staking and consumers making direct side arrangements.
2.) There is less incentive to stake since burning benefits all regardless if you stake or not. Its essentially a stock buyback. But sure you still have the inflationary block generation as rewards.
"But sure you still have the inflationary block generation as rewards."
To be more precise: You are still penalized by dilution/inflation if you dont stake.
The move to PoS will probably bring the gas price down a bit, sharding will bring gas price down and add speed to the network
The drawings I made as a kid are very scarce, but completely worthless.
Demand is what creates value, not scarcity, although scarcity has an amplifying effect
Demand is what creates value, not scarcity, although scarcity has an amplifying effect
Scarcity is also not something that you want from a currency, fundamentally. A currency needs to be abundant when needed, and scarce when oversupplied. That's the point of controlling the money supply based on economic growth rates, and the entire reason we have a Fed.
I believe strongly that cryptocurrencies have a strong future, but what is really needed is a crypto that automatically manages its money supply.
In the same way a car engine uses an oil pump to automatically ensure engine oil pressure is consistent when the car is revving vs when it is idle.
I also think there are better ways to incentivize mining rather than fixed crypto rewards. A better way would be a multi-year bond instrument that would pay coin dividends well into the future so that miners are vested in the future success of the coin, and not just the immediate pump & dump.
I believe strongly that cryptocurrencies have a strong future, but what is really needed is a crypto that automatically manages its money supply.
In the same way a car engine uses an oil pump to automatically ensure engine oil pressure is consistent when the car is revving vs when it is idle.
I also think there are better ways to incentivize mining rather than fixed crypto rewards. A better way would be a multi-year bond instrument that would pay coin dividends well into the future so that miners are vested in the future success of the coin, and not just the immediate pump & dump.
> automatically manages its money supply.
that's an interesting question and premis - automatic monetary policy. I wonder if good monetary policy could be encoded as a set of rules that can be followed by a machine.
that's an interesting question and premis - automatic monetary policy. I wonder if good monetary policy could be encoded as a set of rules that can be followed by a machine.
In order to reduce the money supply, money needs to be removed from circulation. In other words whoever is in charge of managing the money supply has to "sell" valuable stuff and then destroy the proceeds from the sale.
The problem is that we heavily depend on "oracles" in the real world, namely government published statistics and those could be manipulated, even if monetary policy was automated.
You could even use an oracle network to feed economic data to the chain
I think it's easier than this. The Blockchain should be able to calculate the velocity of money just by the amount of currency flowing in the last x blocks. That alone should do it.
There's also some potential for a bond-market whereby miners BID for bonds, and thus the Blockchain can determine the community expected future inflation rate, and factor that into its calculation of money supply growth.
There's also some potential for a bond-market whereby miners BID for bonds, and thus the Blockchain can determine the community expected future inflation rate, and factor that into its calculation of money supply growth.
>Scarcity is also not something that you want from a currency, fundamentally. A currency needs to be abundant when needed, and scarce when oversupplied. That's the point of controlling the money supply based on economic growth rates, and the entire reason we have a Fed.
Yes, we mold the currency to our needs, that's why we have abandoned gold. This is one of the reasons the euro is completely flawed. Each eurozone country has different needs, yet there is only one currency that can only be controlled for the eurozone as a whole. Without further political integration it is not possible to actually give each country what it needs. Some countries need a weak currency, some need a strong currency. Paradoxically, the euro is both too strong and too weak at the same time.
Yes, we mold the currency to our needs, that's why we have abandoned gold. This is one of the reasons the euro is completely flawed. Each eurozone country has different needs, yet there is only one currency that can only be controlled for the eurozone as a whole. Without further political integration it is not possible to actually give each country what it needs. Some countries need a weak currency, some need a strong currency. Paradoxically, the euro is both too strong and too weak at the same time.
> multi-year bond instrument that would pay coin dividends well into the future
That's a great idea. I'm not aware of any blockchain that does this, although some projects with seed funding do have long lockup periods
That's a great idea. I'm not aware of any blockchain that does this, although some projects with seed funding do have long lockup periods
Projects related to fixed income I know of are:
- https://88mph.app/
- https://alchemix.fi/
- https://www.apwine.fi/
- And https://curve.fi/ allows for 4 years lockup of their token to earn more fees.
- https://88mph.app/
- https://alchemix.fi/
- https://www.apwine.fi/
- And https://curve.fi/ allows for 4 years lockup of their token to earn more fees.
The issue is that if they are based on ETH, then they still have the same problem. We need a NEW coin that has this functionality.
i have played with go-ethereum's code in past and that sounds like something that could be implemented as an experimental consensus algo. Have you ever built some sort of model for this reward mechanism?
It's the interplay of supply and demand. Air to breath is in demand but doesn't cost much due to abundant supply.
> "prices aren't determined by supply alone, they are determined by supply and demand"
What we saw with the ICOs in 2017 and early 2018 is that there was a surge in demand for Ethereum to participate in the ICOs, which in turn sent the price shooting up. However, when new ICOs started to dry up in mid-2018 the demand also dried up, and when the companies that received all the Ethereum started to cash out the supply shot up, sending the prices right down. We could see something similar with NFTs.
What we saw with the ICOs in 2017 and early 2018 is that there was a surge in demand for Ethereum to participate in the ICOs, which in turn sent the price shooting up. However, when new ICOs started to dry up in mid-2018 the demand also dried up, and when the companies that received all the Ethereum started to cash out the supply shot up, sending the prices right down. We could see something similar with NFTs.
> Scarce simply means is in short supply, but prices aren't determined by supply alone, they are determined by supply and demand
You can't predict demand, nobody can. So all things being equal (demand being unpredictable) you are better off holding something which is in low supply.
People are absulutely scared to death about inflation. It's deeply rooted in our brain and rightfully so. The first governments would dilute their citizen by adding lead to coins and reduce the silver %.
The same thing has been going on for millennia.
This is the reason why people hate inflation and have a strong preference for deflation.
You can't predict demand, nobody can. So all things being equal (demand being unpredictable) you are better off holding something which is in low supply.
People are absulutely scared to death about inflation. It's deeply rooted in our brain and rightfully so. The first governments would dilute their citizen by adding lead to coins and reduce the silver %.
The same thing has been going on for millennia.
This is the reason why people hate inflation and have a strong preference for deflation.
> You can't predict demand, nobody can.
You can't predict demand perfectly, but you absolutely can predict demand. In fact that's exactly what everyone is doing when they speculate.
There are also processes that help you predict floors to demand - e.g. that you must pay US taxes in US dollars.
You can't predict demand perfectly, but you absolutely can predict demand. In fact that's exactly what everyone is doing when they speculate.
There are also processes that help you predict floors to demand - e.g. that you must pay US taxes in US dollars.
> You can't predict demand perfectly, but you absolutely can predict demand. In fact that's exactly what everyone is doing when they speculate.
If you want to make money you have to be pretty accurate in your prediction.
Nobody knows what Bitcoin or the S&P will do tomorrow. It's all rooted in psychology and we don't understand anything about it.
We don't even know where ideas come from
If you want to make money you have to be pretty accurate in your prediction.
Nobody knows what Bitcoin or the S&P will do tomorrow. It's all rooted in psychology and we don't understand anything about it.
We don't even know where ideas come from
Ethereum is easy to change (hard forks often) and so cannot be expected to preserve any key characteristics like emission curve or even the permissionless nature.
In fact, Ethereum's monetary policy did change in the past.
In fact, Ethereum's monetary policy did change in the past.
The policy has always been “minimal viable issuance”
what does that mean in practice?
who determines what's minimum and what's viable?
who determines what's minimum and what's viable?
The protocol is still in the early stages of development.
The social contract is that the protocol & monetary policy will ossify after the transition to PoS & sharding is complete.
The social contract is that the protocol & monetary policy will ossify after the transition to PoS & sharding is complete.
Get your pyramid Ponzi out of here: https://www.cynicusrex.com/file/cryptocultscience.html.
i like your writing. but IMO inflation is related to "Regarding energy" section as well.
Constant inflation will require the entire economy to always be active or they will slowly fall behind.
you acknowledge that "you basically worked a month for free" due to you savings being devalued.
If a dollar represents energy or labor, then every dollar really represents the current value of labor and a discounted, amortized accumulation of labor into the future. It's almost like inflation and the time-value of money are baked into every dollar, conceptually. Inflation forces everyone to work. Working for the sake of working isn't energy efficient either. It's probably why crypto exists at all, because people need to always be hustling to stay ahead.
...Not that you need crypto to remove inflation.
Constant inflation will require the entire economy to always be active or they will slowly fall behind.
you acknowledge that "you basically worked a month for free" due to you savings being devalued.
If a dollar represents energy or labor, then every dollar really represents the current value of labor and a discounted, amortized accumulation of labor into the future. It's almost like inflation and the time-value of money are baked into every dollar, conceptually. Inflation forces everyone to work. Working for the sake of working isn't energy efficient either. It's probably why crypto exists at all, because people need to always be hustling to stay ahead.
...Not that you need crypto to remove inflation.
If there is a promise of future cash flows from transaction fees that is dependent on new holders, doesn’t that make it a pyramid, ponzi or MLM scheme?
The transaction flows aren't dependent on new holders, it's dependent on users.
If you somehow banned any new users from using Ethereum, existing users would continue to use Ethereum for the applications built on top of it.
If you somehow banned any new users from using Ethereum, existing users would continue to use Ethereum for the applications built on top of it.
Not sure what the exact definition of those things are, but the ether burns might be a counter-example (could say it's similar to dividends), so it's not only dependent on new holders.
It is just inflation of money supply, same as with fiat currencies.
>It's fiat 2.0, but with emojis.
You say that like it's a bad thing.
You say that like it's a bad thing.
Ha! emojis are great, sure.
I'm just not sure there is any real innovation here, it all seems to be rather circular.
I'm just not sure there is any real innovation here, it all seems to be rather circular.
A domain where its default home page is a PDF? That's a new one...
ps. And I'm not buying the "environmentally friendly" argument until proof-of-stake is actually live and completely displaces PoW in mainline production.
ps. And I'm not buying the "environmentally friendly" argument until proof-of-stake is actually live and completely displaces PoW in mainline production.
If the issue is whether PoS will work is troubling you: other PoS chains like Algorand have been successfully running for well over a year. Seems in no doubt.
Maybe so, but that still doesn't change that PoS on Ethereum itself has been "coming soon" forever. Until the switch actually happens in full, it's still a power-guzzling PoW chain.
Youll be happy to hear there is a hackthon going on right now testing out the move onto PoS.
https://rayonism.io/
https://rayonism.io/
Algorand has a handful of validator nodes which are chosen by the creators. You can't participate in validating even if you want to. It's completely centralized, which as far as I'm concerned defeats the purpose of cryptocurrency. Why do you think, despite the hype, it hasn't taken off in price like others, despite "appearing" technically superior? Massive sell pressure from these behemoth validator node holders, who receive the lion's share of the stake rewards for... running a vps
The potential issue isn't spontaneous breakage, but rather a determined attacker exploiting the incentive structure in an unexpected manner.
And the financial motivation to do this is much greater for ETH since it's around 100 times more liquid than ALGO.
And the financial motivation to do this is much greater for ETH since it's around 100 times more liquid than ALGO.
It will likely not fail due to a direct attack on PoS. Ethereum has shown they are willing to rollback the chain in case of attacks.
What's more concerning is that Proof of Wealth (which is what Stake really is), is just going to lead to those with biggest balances dictating rules to everyone else. Exactly what happened in EOS, Steem, etc...
It will become a plutocracy with cute emojis.
What's more concerning is that Proof of Wealth (which is what Stake really is), is just going to lead to those with biggest balances dictating rules to everyone else. Exactly what happened in EOS, Steem, etc...
It will become a plutocracy with cute emojis.
EOS and Steemit are delegated Proof-of-Stake, people elect "grand stakers" that will do everything, and this lead to briberies.
>It will become a plutocracy with cute emojis.
Three comments repeating the same point are not enough, you should spam this argument some more, maybe then it will make sense.
Three comments repeating the same point are not enough, you should spam this argument some more, maybe then it will make sense.
Do you have any actual counterpoints w.r.t previous numerous failures of POS?
> What's more concerning is that Proof of Wealth (which is what Stake really is), is just going to lead to those with biggest balances dictating rules to everyone else.
So if PoW and PoS both suffer the same problem of minority dictating rules to everyone else do you know of any consensus algorithm used in crypto that avoids that problem?
So if PoW and PoS both suffer the same problem of minority dictating rules to everyone else do you know of any consensus algorithm used in crypto that avoids that problem?
Cosmos.network,since 2019. I am amazed so few people are aware of Cosmos SDK and ecosystem
What is crypto replacing really? I’ve yet to read even a fair explanation without mental gymnastics. And I’ve been waiting to the last ten years.
Banks and physical currency alike.
You can now transfer value simply by having a public/private key pair. No need for banks and their multi-day wire transfers. No need for KYC. You can borrow and lend on a decentralized network within minutes. Invest in markets, make purchases. All without relying on a centralized entity, and without being bound by your government.
Crypto really is something beautiful to the cypherpunk in me.
You can now transfer value simply by having a public/private key pair. No need for banks and their multi-day wire transfers. No need for KYC. You can borrow and lend on a decentralized network within minutes. Invest in markets, make purchases. All without relying on a centralized entity, and without being bound by your government.
Crypto really is something beautiful to the cypherpunk in me.
You still need KYC at entry and exit points into the crypto market (e.g. Coinbase), you still need to transfer fiat money onto exchanges via traditional payments infrastructure.
The decentralised, utopian vision only works if the entire game is played there.
Also, a side note, KYC is a good thing for things like AML. The ability to dispute with centralised orgs like banks is a good thing; the major issue with decentralised solutions is that there's no accountability for issues like fraud.
The decentralised, utopian vision only works if the entire game is played there.
Also, a side note, KYC is a good thing for things like AML. The ability to dispute with centralised orgs like banks is a good thing; the major issue with decentralised solutions is that there's no accountability for issues like fraud.
Things like localmonero you can trade fiat and monero without KYC.
http://jpkoning.blogspot.com/2021/03/from-circle-of-gold-to-...
"By solving the dishonesty and fungibility problems, bitcoin has radically dialed up the contagion factor for chain letter technology to a degree never experienced before. Bitcoin has become the first chain letter to go mainstream. It is the first chain letter to go global."
"By solving the dishonesty and fungibility problems, bitcoin has radically dialed up the contagion factor for chain letter technology to a degree never experienced before. Bitcoin has become the first chain letter to go mainstream. It is the first chain letter to go global."
I'm not sure it's replacing anything. It's more a new addition to the planet.
Will change everything .
crypto overall is a joke.
Bitcoin is replacing central banks.
Bitcoin is replacing central banks.
Bitcoin is more likely going to be the Lycos to Google or MySpace to Facebook.
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Personally, I've moved all of my funds from other currencies into Ethereum. Not that I think it will make lots of money, but because Ethereum actually could have utility, and has a solution to the climate change impacts of Bitcoin.
So really, if I'm going to hold any cryptocurrencies, that's where I want them
So really, if I'm going to hold any cryptocurrencies, that's where I want them
Proof of Stake just means those with the biggest money bags (stake sounds so much better than wealth) rule over you, explicitly.
It is simply plutocracy, but with cute emojis.
It is simply plutocracy, but with cute emojis.
So we don’t have plutocracy in the current fiat money system(s)? Relative inequality is super low and investment opportunities abound for all income levels?
We don’t have a plutocracy in PoW coins like BTC either right? Super cheap and easy to spin up a mining operation I heard.
We don’t have a plutocracy in PoW coins like BTC either right? Super cheap and easy to spin up a mining operation I heard.
Given that nearly every miner and large exchange/business tried and failed to force changes to BTC, I'd argue that influence of plutocrats on the fundamental properties of Bitcoin is significantly lower.
Failure of the New York Agreement is certainly more reassuring than never-ending hard forks.
Failure of the New York Agreement is certainly more reassuring than never-ending hard forks.
Yeah, and any discussion surrounding hard forks was allowed right in the open on /r/bitcoin and bitcointalk, leading to informed node operators.. oh wait, that didn't happen, people got banned.
And Proof of Work means those with access to cheap electricity rule over the network, which is why most mining happens in western China.
>>Proof of Stake just means those with the biggest money bags (stake sounds so much better than wealth) rule over you, explicitly.
No, in Ethereum, Proof of Stake does not set protocol parameters, so no one rules over you.
No, in Ethereum, Proof of Stake does not set protocol parameters, so no one rules over you.
The start of the document:
>The purpose of this memo is not to denounce Bitcoin. Bitcoin enjoys a growing institutional spotlight, a compelling narrative as digital gold, and a portfolio allocation as an inflation hedge. However, institutional allocation into the Ethereum ecosystem is currently low...
You can denounce bitcoin for the CO2 emissions though.
At least etherium is trying to go proof of stake. If institutions pile into bitcoin the price and emissions will 10x which I'm not sure is on. Governments can't control bitcoin but they can control institutions.
>The purpose of this memo is not to denounce Bitcoin. Bitcoin enjoys a growing institutional spotlight, a compelling narrative as digital gold, and a portfolio allocation as an inflation hedge. However, institutional allocation into the Ethereum ecosystem is currently low...
You can denounce bitcoin for the CO2 emissions though.
At least etherium is trying to go proof of stake. If institutions pile into bitcoin the price and emissions will 10x which I'm not sure is on. Governments can't control bitcoin but they can control institutions.
Put another way, if institutions pile into bitcoin, the value of produced energy will rise, and green energy infrastructure projects which were previously marginal would become profitable and thus executed.
Uh... Also tons of coal will be burned. BTW "green" energy products are not 100% sustainable. Lots of rare earth metals and other mined materials go into solar panels. We can't recycle solar panels right now, neither wind turbine blades. Hydro destroys riparian ecosystems.
Useless uses of energy cannot be construed as good for the world.
Useless uses of energy cannot be construed as good for the world.
A planned upgrade of 6 years? How would that be in the future? How long does it take to fix a minor issue?
Tezos for example is able to evolve every 3-4 months without forking and is PoS since 2017. Also they're doing a better job on security. https://tezos.com/
Not doubting any of your statements, but why have I never heard of it before? If it is good why hasn't it displaced ethereum and become more mainstream? Are there any cons that prevent it to become more prominent?
(sincere question from me, I am curious to know more)
(sincere question from me, I am curious to know more)
The same reason that Bitcoin hasn't been displaced by newer projects.
Both have massive network effects. Marginal technology improvements aren't enough to convince developers to build on a platform that has no users, no application & no infrastructure.
Both have massive network effects. Marginal technology improvements aren't enough to convince developers to build on a platform that has no users, no application & no infrastructure.
This is are very good question. I really don't know why the mainstream ignored this project so far. Compared to some other projects, there is no single person in the center of the project, so there is no one to be hyped. This is sad but it seems to be a disadvantage. The loudest are getting attention and with so many projects out there, the tezos community was a long time pretty silent.
The smart contract language is completely different from solidity. Its a functional language which allows formal verification. This is one reason which makes it harder for developers to migrate to tezos. It's easeier to migrate to an ethereum clone.
Sapling came with the edo upgrade this year, this allows privacy preserving smart contracts. Gas price is extremly low. A part of the nft hype has already migrated to tezos because of PoS and low gas prices. See the stats here https://better-call.dev/stats/mainnet/general
The next upgrade is currently in the voting phase. When you're technically interested in it see here http://doc.tzalpha.net/protocols/009_florence.html
Last week a marketing campaign started, maybe you will see an add somewhere in the near future. A lot is going on in adoption atm, here a few recent news:
banking https://xtz.news/adoption/french-banking-giant-societe-gener...
gaming https://xtz.news/adoption/ubisoft-become-a-tezos-corporate-b...
stablecoin https://xtz.news/adoption/groupe-casino-with-11000-stores-to...
digital identity https://xtz.news/adoption/spruce-systems-makes-it-into-y-com...
Last week a marketing campaign started, maybe you will see an add somewhere in the near future. A lot is going on in adoption atm, here a few recent news:
banking https://xtz.news/adoption/french-banking-giant-societe-gener...
gaming https://xtz.news/adoption/ubisoft-become-a-tezos-corporate-b...
stablecoin https://xtz.news/adoption/groupe-casino-with-11000-stores-to...
digital identity https://xtz.news/adoption/spruce-systems-makes-it-into-y-com...
> Its a functional language which allows formal verification.
Imperative languages can also be formally verified. See the K framework for formal modeling and verification of EVM smart contracts.
Detailed list: https://github.com/leonardoalt/ethereum_formal_verification_...
> Gas price is extremely low.
Beware, the gas price might be low because there is no volume. Binance Smart Chain had a lot of difficulty the past 2 days because they underpriced gas cost and basically DOS-ed themselves:
- https://mobile.twitter.com/PancakeSwap/status/13845099723948...
- https://mobile.twitter.com/peter_szilagyi/status/13848238801...
You missed a very nice example of Tezos adoption, which was the French military police using it to pay sources
https://journalducoin.com/blockchain/actualites-blockchain/u...
Imperative languages can also be formally verified. See the K framework for formal modeling and verification of EVM smart contracts.
Detailed list: https://github.com/leonardoalt/ethereum_formal_verification_...
> Gas price is extremely low.
Beware, the gas price might be low because there is no volume. Binance Smart Chain had a lot of difficulty the past 2 days because they underpriced gas cost and basically DOS-ed themselves:
- https://mobile.twitter.com/PancakeSwap/status/13845099723948...
- https://mobile.twitter.com/peter_szilagyi/status/13848238801...
You missed a very nice example of Tezos adoption, which was the French military police using it to pay sources
https://journalducoin.com/blockchain/actualites-blockchain/u...
> Imperative languages can also be formally verified. See the K framework for formal modeling and verification of EVM smart contracts.
Good to see that eth has the possibility too. It's a must have in my opinion.
> Beware, the gas price might be low because there is no volume. Binance Smart Chain had a lot of difficulty the past 2 days because they underpriced gas cost and basically DOS-ed themselves:
I don't know how tezos would react when DOS-ed. The next upgrade brings some further optimizations with it. Gas will then be calculated using saturated arithmetic.
Good to see that eth has the possibility too. It's a must have in my opinion.
> Beware, the gas price might be low because there is no volume. Binance Smart Chain had a lot of difficulty the past 2 days because they underpriced gas cost and basically DOS-ed themselves:
I don't know how tezos would react when DOS-ed. The next upgrade brings some further optimizations with it. Gas will then be calculated using saturated arithmetic.
Cash flow is for businesses.
Ethereum doesn’t know what it is. The rules are always changing, running a full node is practically impossible, and issuance is always changing. It’s not even clear that the features claimed in this paper will be true one year from now.
Multiple consensus failures (most recently this last month) and constant design changes do not provide a secure foundation for sound money.
Ethereum doesn’t know what it is. The rules are always changing, running a full node is practically impossible, and issuance is always changing. It’s not even clear that the features claimed in this paper will be true one year from now.
Multiple consensus failures (most recently this last month) and constant design changes do not provide a secure foundation for sound money.
> running a full node is practically impossible
Can you elaborate?
I found it super easy to setup a full (non-mining) ETH1 node on an Intel NUC running Ubuntu. And on the same NUC I’m running two validator nodes on the ETH2 mainnet, which together have earned about 3 ETH in rewards so far. The NUC is hooked to a cable Internet connection at home, nothing fancy.
Can you elaborate?
I found it super easy to setup a full (non-mining) ETH1 node on an Intel NUC running Ubuntu. And on the same NUC I’m running two validator nodes on the ETH2 mainnet, which together have earned about 3 ETH in rewards so far. The NUC is hooked to a cable Internet connection at home, nothing fancy.
The above comment is based on a disproven conspiracy theory that claims no one knows the true number of ETH in existence, and misinformation that a single client (of many) failing to sync for ~6 hours after an upgrade was a problem with Ethereum.
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It could be a case of the perfect is the enemy of the good though.
I mean Ethereum isn't perfect but not much else is either.
I mean Ethereum isn't perfect but not much else is either.
If I’m going to stick my savings in a cryptocurrency, I want the network to be stable for the foreseeable future (and be private, but that’s another story).
So what you’re saying is that this random pdf website is the ultimate say on what Ethereum is? Not maybe what the EF has to say?
https://ethereum.org/en/what-is-ethereum/
https://ethereum.org/en/what-is-ethereum/
It's disturbing how tribalism is allowing people to completely ignore reality.
Ethereum's blockchain uses up over 1 terrabyte of space. Because Ethereum nodes do not provide any search feature natively, most third-party software integrations end up being implemented via the use of centralized services (which defeats the whole purpose of Ethereum).
As for Bitcoin using the same amount of electricity as an entire country to perform 2 transactions per second, that is also shocking.
But modern fiat money-printing allows all pyramid schemes to thrive. I'm convinced that if Bernie Madoff had managed to keep his ponzi scheme going just one more decade, he would never have been caught.
Ethereum's blockchain uses up over 1 terrabyte of space. Because Ethereum nodes do not provide any search feature natively, most third-party software integrations end up being implemented via the use of centralized services (which defeats the whole purpose of Ethereum).
As for Bitcoin using the same amount of electricity as an entire country to perform 2 transactions per second, that is also shocking.
But modern fiat money-printing allows all pyramid schemes to thrive. I'm convinced that if Bernie Madoff had managed to keep his ponzi scheme going just one more decade, he would never have been caught.
>Ethereum's blockchain uses up over 1 terrabyte
Presumably any currency that records all the world's transactions is going to have terabytes if not petabytes of data. Either you go with a tech that will support big data or you limit the transactions like bitcoin making it impractical as an everyday payment mechanism?
For me the important part of decentralized is it can be run in different places so governments can't shut it down, not that everyone can process the world's transactions on their laptop.
Presumably any currency that records all the world's transactions is going to have terabytes if not petabytes of data. Either you go with a tech that will support big data or you limit the transactions like bitcoin making it impractical as an everyday payment mechanism?
For me the important part of decentralized is it can be run in different places so governments can't shut it down, not that everyone can process the world's transactions on their laptop.
Why should it be a single world currency? Why not just have a system of multiple currencies which can be accepted interchangeably as payment? Automatic valuation and conversion of a cryptocurrency is possible. It can even be done in a decentralized way without trusting anyone.
You get much greater interoperability / a much larger market when everyone is on the same ledger, using the same protocol to exchange value. There are use-cases where a smaller more specialized ledger will be more optimal, but there is a very large set of use-cases for the 'financial protocol with a huge number of users'.
It's like this currently, but it doesn't have to stay that way.
You could have multiple cryptocurrencies which support the exact same public API and clients could figure out their relative values automatically by crawling DEX markets (looking at current prices and daily trade volumes).
People who do business internationally are already used to the idea of accepting payment in multiple currencies - With the right set of tools, the friction involved in accepting different cryptocurrencies (e.g. within the same ecosystem) can be reduced to nothing, in fact, it might be a profitable competitive strategy for a business to accept more different cryptocurrencies (they can charge a big premium for accepting more exotic/low volume tokens).
You could have multiple cryptocurrencies which support the exact same public API and clients could figure out their relative values automatically by crawling DEX markets (looking at current prices and daily trade volumes).
People who do business internationally are already used to the idea of accepting payment in multiple currencies - With the right set of tools, the friction involved in accepting different cryptocurrencies (e.g. within the same ecosystem) can be reduced to nothing, in fact, it might be a profitable competitive strategy for a business to accept more different cryptocurrencies (they can charge a big premium for accepting more exotic/low volume tokens).
>>You could have multiple cryptocurrencies which support the exact same public API and clients could figure out their relative values automatically by crawling DEX markets (looking at current prices and daily trade volumes).
Transmitting between ledgers is associated with a cost, due to the capital requirements that make inter-chain bridges possible.
Look at the current attempts at such bridges, like Connext: they require individuals to run 'routing' nodes that faciliate inter-chain transfers by locking collateral in multiple chains to act as liquidity. There is a cost to this, that doesn't exist when two parties are transacting on the same ledger.
Transmitting between ledgers is associated with a cost, due to the capital requirements that make inter-chain bridges possible.
Look at the current attempts at such bridges, like Connext: they require individuals to run 'routing' nodes that faciliate inter-chain transfers by locking collateral in multiple chains to act as liquidity. There is a cost to this, that doesn't exist when two parties are transacting on the same ledger.
Proof of work cryptocurrency mining is a wasteful industry that proof of stake gets rid of. Rejoice.
I know most of us technical people here dismiss Ethereum as being just another new fangled pyramid scheme like Bitcoin and the others, but you've got to hand it to them, it is very well-disguised with plausible deniability (DApps, DeFi, etc.), and they keep on coming up with new ways to make it self-sustaining (ICOs, NFTs, etc.).
Ethereum is passé. Dogecoin is far superior and much wow better suited for the current meme era. Which is reflected in the share price.
ah. Learning what ethereum is by looking into a random pdf by an unknown twitter user. Never change your pseudointellectuallity hn, never change
never change your creditentialism
I am one of the implementers of Ethereum Proof of Stake (https://github.com/prysmaticlabs/prysm) and I would like to clarify a lot of misconceptions around Ethereum and why we find this technology so exciting:
- Proof of stake has serious flaws if done from scratch, as you are trying to secure a network using value created out of thin air. Ethereum is migrating to proof of stake from proof of work, and has already built up a security pool of over $200bn USD market cap and a significant amount of activity. ETH as the native asset required for proof of stake has enough security pool to allow the migration to make sense.
- "You have been talking about proof of stake for years, wake me up when it happens". We launched proof of stake on December 1st, 2020 https://www.coindesk.com/valid-points-ether-staked-eth-2-0-q.... This runs as a parallel chain that users deposit ETH into to participate in consensus via a bridge contract. The next step is to merge the current Ethereum chain to use this new chain's consensus, and we are working on this to happen late this year.
- "There is a vibrant developer community, but for what? All speculation?" Yes, speculation was and is ever present in this new technology given how permissionless it is. This means anyone around the world can interact with the blockchain without a gatekeeper. However, there is an incredible amount of financial innovation happening on Ethereum that didn't even exist back in 2017. Really well-thought out stablecoins, flash loans (which are a blockchain native concept), automated market makers such as Uniswap which had more trading volume than Coinbase https://www.theblockcrypto.com/linked/79775/uniswap-coinbase.... We have privacy technologies such as Aztec Protocol or Tornado Cash. We have zero-knowledge proof games such as DarkForest. What makes me personally excited is that Ethereum is like this global, shared computer where every application deployed immediately opens a composable API for others to interact with by design, creating infinite possibilities.
- Ethereum's development is far more decentralized today than it was years ago. Ethereum proof of stake was developed by 4 independent teams, unaffiliated with the Ethereum Foundation, and had a successful launch this past December 1st, 2020, and no, Vitalik cannot roll back the chain.
- "Some other blockchain already had proof of stake and have been running for years". What makes Ethereum proof of stake special is it takes no compromises between decentralization, security, and scalability. At the base layer of the blockchain, Ethereum uses really neat cryptography known as BLS signatures (https://medium.com/cryptoadvance/bls-signatures-better-than-...), which allow for signature aggregation at scale. This means there can hundreds of thousands or millions of consensus participants with minimal network overhead, compared to other chains which have a permissioned set of < 100 consensus participants. Moreover, Ethereum is fully permissionless at the consensus. Anyone can run a validator at home easily on a consumer laptop. You don't need to buy ASICs, live in a country where electricity is cheap, or anything of that nature.
I urge everyone here to look deeper into Ethereum for what it offers and look at the depth of innovation happening in this ecosystem. Happy to answer any questions, as there seems to be a lot of misinformation.
- Proof of stake has serious flaws if done from scratch, as you are trying to secure a network using value created out of thin air. Ethereum is migrating to proof of stake from proof of work, and has already built up a security pool of over $200bn USD market cap and a significant amount of activity. ETH as the native asset required for proof of stake has enough security pool to allow the migration to make sense.
- "You have been talking about proof of stake for years, wake me up when it happens". We launched proof of stake on December 1st, 2020 https://www.coindesk.com/valid-points-ether-staked-eth-2-0-q.... This runs as a parallel chain that users deposit ETH into to participate in consensus via a bridge contract. The next step is to merge the current Ethereum chain to use this new chain's consensus, and we are working on this to happen late this year.
- "There is a vibrant developer community, but for what? All speculation?" Yes, speculation was and is ever present in this new technology given how permissionless it is. This means anyone around the world can interact with the blockchain without a gatekeeper. However, there is an incredible amount of financial innovation happening on Ethereum that didn't even exist back in 2017. Really well-thought out stablecoins, flash loans (which are a blockchain native concept), automated market makers such as Uniswap which had more trading volume than Coinbase https://www.theblockcrypto.com/linked/79775/uniswap-coinbase.... We have privacy technologies such as Aztec Protocol or Tornado Cash. We have zero-knowledge proof games such as DarkForest. What makes me personally excited is that Ethereum is like this global, shared computer where every application deployed immediately opens a composable API for others to interact with by design, creating infinite possibilities.
- Ethereum's development is far more decentralized today than it was years ago. Ethereum proof of stake was developed by 4 independent teams, unaffiliated with the Ethereum Foundation, and had a successful launch this past December 1st, 2020, and no, Vitalik cannot roll back the chain.
- "Some other blockchain already had proof of stake and have been running for years". What makes Ethereum proof of stake special is it takes no compromises between decentralization, security, and scalability. At the base layer of the blockchain, Ethereum uses really neat cryptography known as BLS signatures (https://medium.com/cryptoadvance/bls-signatures-better-than-...), which allow for signature aggregation at scale. This means there can hundreds of thousands or millions of consensus participants with minimal network overhead, compared to other chains which have a permissioned set of < 100 consensus participants. Moreover, Ethereum is fully permissionless at the consensus. Anyone can run a validator at home easily on a consumer laptop. You don't need to buy ASICs, live in a country where electricity is cheap, or anything of that nature.
I urge everyone here to look deeper into Ethereum for what it offers and look at the depth of innovation happening in this ecosystem. Happy to answer any questions, as there seems to be a lot of misinformation.
I looked into staking eth to do my part. But my total return on staking is comprised of price appreciation, carrying costs, slippage in the form of fees (gas I think?), and finally the yield I get from the network for staking.
I am worried about price movement intruding into this scheme. How can the price of ethereum be stabilized so that staking or other forms of lending or collateralization can be done without the price drift wiping out the yield?
I am worried about price movement intruding into this scheme. How can the price of ethereum be stabilized so that staking or other forms of lending or collateralization can be done without the price drift wiping out the yield?
Did Etherium actually switch to proof of stake? That's been talked up for years, but has been delayed several times. The original date was January 2020, but as of now, I can't find a firm date. One Etherium page intended to get people to lock up ETH to stake the system says "Withdrawals won't be live right away.
You won't be able to withdraw your stake until future upgrades are deployed. Withdrawals should be available once mainnet has docked with the Beacon Chain system."
It's always a bad sign in the cryptocurrency world when withdrawals are delayed.
The paper is written as if the change to proof of stake has happened.
It's always a bad sign in the cryptocurrency world when withdrawals are delayed.
The paper is written as if the change to proof of stake has happened.
Ethereum will likely switch to proof of stake later this year, or perhaps Q1 2022 at the latest.
https://twitter.com/drakefjustin/status/1379052831982956547
https://twitter.com/drakefjustin/status/1379052831982956547
I was looking this up recently. There's a 3 phase plan to switch to proof of stake, the first phase of launching a new chain is complete, but it could take years to complete this migration.
Calling it 'Etherium' to provoke Ethereum advocates is completely inappropriate as per HN rules.
So is assuming bad faith against HN rules. Etherium seems like an innocent error.
This user has commented on Ethereum posts numerous times, and I have actually corrected them on the spelling in the past. That this is deliberate provocating/trolling is not an assumption.
And that's assuming the ETH crowd doesn't change the supply formula (which no one currently understands) on a whim.