Coinbase is essentially transforming itself into a bank to compete with the other Wall St. banks, but rely on their early crypto position as a competitive advantage. This seems very much opposite of the "No Banks" and "Decentralization" mantra of cryptocurrency.
The success of Coinbase seems to indicate that customers are voting with their wallets that "No Banks" and "Decentralization" (including anonymity and censorship resistance) are not actually that highly desirable features for most people, they're willing to give them up and eager to use a trustworthy centralized service that's a bit more convenient and handles the technical risks for them.
Do you think decentralization is not actually that desirable, or that there are just very limited avenues for buying/selling? Cryptocurrencies are scary enough for most people, throwing them into a forex like platform on currencies they don't understand the technology behind only amplifies the confusion and reluctance. I think the desire for decentralization is very real, but the "front end" technology hasn't caught up yet.
>I think the desire for decentralization is very real
Ideology aside, as a random human being, why would I care about that? I need to buy bread at the bakery, I can use cash, my "centralized" Visa or my Bitcoin wallet, all other things being equal what difference does decentralization make?
And if it's solely about principles then I have bad news.
I think most people would agree that ideologically speaking if you value privacy it makes more sense to use Duckduckgo rather than Google search, yet even though DDG now offers a quality of service comparable to the big G it still remains extremely confidential. The friction to get from one service to the other is like 3 clicks in your browser's UI, yet most people don't care.
If 99% of people can't be bothered to ditch Google search in favor of something else even though there's very little friction, how can you ever hope to convince people to switch from Visa to a bitcoin wallet which is significantly less convenient and makes it easy to irrevocably lose your money? That's a pipe dream IMO.
> even though DDG now offers a quality of service comparable to the big G it still remains extremely confidential
I’ve tried to switch to DDG a couple of times and I use it as the default search engine on my cellphone now but it’s not yet as good as Google is for easily finding exactly what I want and I doubt it will ever be because it is thanks to the very thing I don’t like about Google — the amount of things they know about their users — that Google are able to give the results that their users are looking for.
I bought a book called Relevant Search because I think that it might be possible to build a very good search engine for oneself but I have not yet had time to even start reading that book so.
It's the other way around for me. I use it as default on the desktop because I just type !g whenever the query is more complex. Most searches are still sth easy (or programming questions where DDG is really good) so I probably only use Google for 20-30% of queries. On the phone that's too much of a hassle (and my queries there are often more localized) so I keep using Google.
I think switching to DDG is worth it even if you only lower your usage to a certain degree. It means no company has your full profile anymore.
I had the same experience with DDG/G. Google results are just more relevant due to the fact that they know where you are, and what you've searched for etc. I don't see myself as starring in my own personalised version of the movie "Enemy of the State", so opt for the more useful service rather than the more private one.
DDG results can be hit or miss (it doesn't yet do a good job of filtering spam, for instance), but a simple 'g!' In your search terms will have DDG query google for you, thus acting as a sort of proxy. This means you can have the anonymity of DDG and the breadth of google.
What is interesting is some kind of way to measure in percentages why people use cryptocurrencies. Speculation? Privacy reasons? Security reasons? Ideological reasons? Careless about environment?
My sense is that it's mainly speculative, with a strong base of "honest" demand from people with security concerns (ransomware, drugs, money laundering, other crime) that preclude them from using the regular banking system.
This is all on top of the initial users, Usenet-style "cryptoanarchists" who actually got the whole network running in the first place, but who are now a tiny minority of actual users, though perhaps a majority of the people who have already made a fortune on this stuff, and thus are now leading investment in the space. In a way, these are just speculators who bought early for reasons other than money (like for example, that it seemed like a cool conceit from a William Gibson novel).
I would think this is a rather fringe use-case, depending on what things you define as criminal. I mean, in the original technolibertarian/cryptoanarchist formulation, cryptocoin was meant to free folks from being persecuted for such "non-crimes" as tax evasion, securities fraud, prostitution, narcotics trafficking, arms trafficking, etc. If you include this stuff, I think it's a sizable fraction, but still not generating as much demand as the speculators are.
If you really just mean "remittance payments to OFAC-listed countries", then I can't imagine that's a big use case at all, especially since the first world, the source of most of these remittances, has made it pretty difficult to turn cash or legally-earned in-my-bank-because-i-cashed-my-paycheck money into crypto without a paper trail.
Also, the OFAC countries are just not the most popular places to send remittances from the west, the reason being that its just really hard to do so. This in turn reduces incentive for otherwise remittance-sending immigrants from those countries to go to the West, which in turn lowers demand for the service. If the US were to suddenly put Mexico on the OFAC list (not unthinkable given the current administration), there would be riots in the streets in both countries, because the scale of these payments mean that large fractions of both economies are built on the flow of this money (in Mexico), and the labor it motivates (in the US).
>>cryptocoin was meant to free folks from being persecuted for such "non-crimes" as tax evasion, securities fraud, prostitution, narcotics trafficking, arms trafficking, etc.
It's important to clarify that "securities fraud" here refers to what statutes refer to as securities fraud, and not any actual fraud involving securities.
Any sale of a non-registered security is termed "securities fraud" by the Securities Act, even if the sale involves zero fraud. The term, as used in the statutory context, is a misnomer, and an Orwellian attempt at misleading the public into believing there was a victim in the transaction.
Generally libertarians like the cypherpunks do not object to laws against real fraud. It's the victimless crimes like prostitution, trade in unregistered securities, drugs, etc that they believe should be free of prohibition.
Anyway, to your point, there are legal industries where traditional financial players cannot operate, like the legal cannabis industry, due to everything from corporate policies being slow to react to the change in laws, to reputational risk, to non-binding but still influential guidances and warnings from regulatory agencies (e.g. Operation Chokepoint). These also might be/become natural sources of demand for cryptocurrency.
I think that decentralization as such is not an "end goal" for pretty much everyone. Decentralization is one of ways that can enable some particular features (e.g. untraceability or censorship resistance) that can be valuable but the value of these features is different highly situational and can be low or even negative for many people; so it could be more constructive to talk about the benefits those particular features and not centralization in general.
E.g. in my opinion most people don't want irrevocable untraceable transactions from their account as that increases fraud risk and (in their particular case) doesn't bring much benefit. Some do benefit from that, but it's a minority in the general population (but a large portion of early cryptocurrency adopters). Most people actually want something like a credit card payment that has a clear benefactor and the ability to recall the payment in case of fraud or other dispute. In other cases, the value is so low people are not willing to "pay" even very low price of convenience to gain them.
There are some people (and locations!) where there is large motivation to avoid various capital controls and possibility of government control, but for most people in first world countries it's preferable to have their money in the reach of local legal system rather than outside, as they'd expect (and need!) the legal system to protect them in case of disputes and have a low risk of it working against them. Of course there are all kinds of exceptions where people might desire a way to get undeclared money (say, to avoid making child support payments) but that's usually a sufficiently large motivation only if you want to defraud someone and most people actually are honest and pay what they're due.
Also, there are all kinds of trivial reasons why you'd want an institution to handle the trade - e.g. if you're investing, you'd need proper documentation for the crypto purchase so that it'd be tax deductible for the crypto sale, otherwise the whole sale could be treated as taxable income.
Decentralization doesn't have to mean anonymization. The real benefits lay in the lack of a middle man to take a cut and possibly slow down processing times.
Not really. Pure peer to peer is always an option with truly decentralized systems, so you can always completely bypass the middle man. It's not really decentralized if it's not "pure" peer to peer.
The benefit lies in the lack of a middle man who you have to ask for permission.
I don't care if he takes a cut, I don't care if he slows down processing, but I care as soon as he starts saying "my bank doesn't allow your kind of business".
But then peer to peer is not always a good thing. Often times finding a peer is a big issue. An example is AirBnb. There were people on both sides who required this service. But it actually took a centralised service to actually get it working.
Given the current Bitcoin processing fees and time, a decent centralized middleman could plausibly offer off-chain bulk transactions within their "network" that are faster and cheaper, and only periodically settle the totals on-chain.
Centralized systems have always been _technically_ superior to decentralized when it comes speed and fees, but the middlemen that control these systems have never proven themselves to have the self control needed to not interfere significantly in transactions.
What do you have in mind exactly? If by interfering you mean things like chargeback or denying transactions that appear fraudulent that's the point the parent was making, for most people those are useful services, not drawbacks.
There are multiple centralized solutions that provide (among other services) nearly instant global transfers, Western Union is the first that comes to mind.
However, most centralized solutions that provide nearly instant transfers focus on one market (say, Eurozone or USA) and so they're not global - so there's no single "they" that could provide these with the caveat of higher risk, and it's a flaw of decentralization of international banking; the delays for worldwide transfers are caused by lack of a centralized solution neccessitating multiple bilateral transfers between unrelated institutions. Where a centralized system exists (e.g. Eurozone Target2 system), customers can have nearly instant payments within that system if you're willing to pay for that.
You’re commenting on this thread about Coinbase, one of the largest cryptocurrency exchanges. Seems very centralised.
I actually wonder (and I’m sure someone’s done the math), what would be the transaction cost and confirmation times of the Bitcoin network if it approached the number of transactions as the Mastercars or Visa networks?
The "Decentralization" vision hasn't really been fully realized, and when it is working, it's not necessarily talked about or noticeable. Whether it's desired or not has no bearing on a service's popularity. Many do not desire the centralization of data collection yet still use Facebook and Google because it provides shortcuts. Point being, more users on Coinbase doesn't imply that decentralization is not a desirable feature (and IMO it's not a product feature at all but rather an architectural one that users aren't really deciding for or against).
"Many do not desire the centralization of data collection yet still use Facebook and Google because it provides shortcuts." is evidence that they don't have a significant desire for decentralization, their actions indicate that it's just a weak nice-to-have wish compared to their actual desires (e.g. getting these shortcuts), that it's not something that matters enough to actually base their decisions on it.
It's the purest form of expressed preference - if people systematically give up A to gain B, then it's clear that they actually don't desire A that much and that they actually do desire B, no matter what they might say.
The same applies to Coinbase - all this implies that for many, many users decentralization is not a feature that's desirable enough to matter, that it's benefits are not noticable and not important enough to make it a serious factor in making their decisions; whatever "the decentralization vision" is, it's not relevant enough so that they'd be willing to give up other benefits to gain these of decentralization.
Why do you think that the cost has to be equivalent? The difference of cost would be a perfect measure of the strength of that desire; if people would be willing to pay a significant premium to get X, then that's a credible sign that they desire X and it matters to them; and if they're not willing to pay a nontrivial premium to get X then clearly it's not valuable to them.
The qualifier about perfect information and comprehension is legit, but given that, if you'd choose decentralization only if the cost and other circumstances are equivalent then that's a sign that decentralization is worth zero.
As someone who recently tried to help a friend with recovering a lost/forgotten/who knows DashCore wallet password, containing a reasonable decent amount of funds, I'm skeptical that _most people_ will be willing to accept sole responsibility for their financial security. Most would rather defer to a third party. Which rather undermines the entire crypto project, it would seem
Sure. But why are alternatives so scarce or difficult?
Because federal and state governments are going out of their way to attack any non-banklike means of converting fiat to cryptocurrency. From heavy regulation (see: New York) to arbitrary abuse of unrelated regulation in form of police action (localbitcoin sellers atttacked and jailed under KYC). This funnels people into players that are willing to bend over for the establishment like Coinbase.
You have a really good point there, the situation is not really indicative of a free choice to give up anonymity but rather of a somewhat forced choice between a 'law-abiding' service versus an 'outlaw' service model that has less restrictions but gets harassed by the authorities.
However, for the majority of people, obeying local laws (including AML/KYC regulations) is simply a part of their normal not-being-a-criminal life, not "bending over for the establishment"; they don't need anonymity and payment-censorship resistance and have no problem if their service provider complies with the law, so if the main advantage for some means of converting fiat to cryptocurrency is simply avoiding these regulations, then that provides no added value (and possibly negative value i.e. risk) to them, and they would reasonably not choose that.
There could be all kinds of non-banklike decentralized means of converting fiat to cryptocurrency, but there's some self-segmentation - if some seller would be obeying AML, KYC and IRS cash reporting regulations, then they might as well be banklike, since they'll be competing with banklike institutions, and if not, then yeah, that's a crime and would naturally be attacked by governments and avoided by a large portion of honest citizens. There are certain niche markets for whom it's important to be beyond the reach of the law, but that's not a need for most people, for most people even a decentralized solution would have to obey all the relevant KYC and other laws if they'd be comfortable in using it. A professional buyer/seller on localbitcoin is very much comparable to a smaller version of Coinbase with less reputation and thus needs to offer some advantage so people would pick them instead of Coinbase, and I'm struggling to see what that advantage would be other than evasion of regulations. It's clear that decentralization can help with that, but can it help with something else, something that a law-abiding consumer cares about?
One can argue about the details of regulation and licencing, but even if they would be relaxed to facilitate operation of small decentralized players, in any case the "above board" market will have to ensure that KYC (anti-anonymity), AML (filtering) and tax reporting for any large volumes, that is not negotiable; and the "underground" market that avoids that won't be attractive to most customers because of the risks involved by, as you say, governments attacking it and jailing operators.
Well, I think you are going too far with your claim. Nobody is giving these properties up, you can withdraw your coins. If Coinbase said “we won’t allow withdrawing coins” and customers kept using CB then you can make the claim you are making.
They're not giving these properties up permanently, but they're choosing not to use them. Just as people using banks instead of cash implies that they feel that the advantages of banks outweigh the disadvantages, the fact that people choose not to withdraw (and fully control) their coins but instead "bank" them with coinbase is some indication that decentralization isn't an important issue for them and that they're not going to take advantage of its benefits whatever those may be.
The trust is still decentralized unless coinbase someday drops external blockchain interop, i have a hard time imagining exactly how that could come to pass
That sounds good, but I get the distinct impression that most crypto holders don't understand tech very well at all, nor what the true risks are. Furthermore, these places like coinbase, aren't they just bankers who moved into the crypto realm?
If it were possible to avoid banks altogether, for sound money to exist, and for governments to subsequently be less all-powerful, I'd be all for crypto. However, I don't believe in fairy tales.
The mantra of cryptocurrency changes every few years depending on what brings in new money. Now BTC's a "store of value" that investors should have exposure to in their portfolio, and the ICOs are speculative investments. In two years they'll come up with a new narrative.
BTC's dominance in the crypto space is at record lows[1], so I would question their ability to speak for the ecosystem as a whole. Ethereum, Ripple, and Bitcoin Cash have a voice as well. Each of those has a very different vision for the future of cryptocurrency, and none of them are talking about "store of value" as their main goal.
1. I don't think there's anything wrong with changing the "mantra" as it were. People learn things, opinions change; do your own research and form your own conclusions/hypotheses.
2. There's no one fixed "mantra" of cryptocurrency. As you point out yourself, there's some people who see BTC as a store of value first and optimize for that, and I'm sure you're aware that that's at least not an uncontroversial decision. Different people have different opinions about a ton of different things like monetary supply policy, the importance of censorship-resistance, immutability, non-currency use-cases, etc.
The problem crypto has is simple: You can't pay your rent in crypto, and you can't earn crypto as salary. So you need an intermediate to convert it to/from fiat. And you need to keep using fiat. Therefore you need a way to convert.
The most decentralised is something like localbitcoins, but for most people its too much hassle. It's like selling a second hand car type process (which most people hate) just to get cash to spend. Therefore a centralised bank it much more preferable.
No, because really 'cryptocurrencies industry' is a misunderstanding.
Finance is something everybody uses. Blockchain/cryptocurrency gives you a whole next level of being able to do it.
And blockchain/cryptocurrency is about administrative efforts much more than it is about finance. Finance is just a very delicious application in a world that only gets hard for money.
Obviously 1000 is a bit more than the grandparent can 'name' directly, but I would in fact like to see some evidence indicating the presence of at least 1000 US companies that pay in crypto.
Probably possible with data mining. Find "salary like" amounts send on a regular basis on the B.C. If to/from addresses differ then you are looking for the same amount each month (fiat) across all addresses.
Can we stop using the term "fiat" to refer to government-issued money? The important feature of fiat currencies is that they're backed by nothing. The fact that fiat currencies are normally government-issued is incidental. The term exists to contrast them with representative currencies. The same goes for most cryptocurrency: it's not backed by anything and only has value because most people agree it has value. Bitcoin is a kind of fiat currency, or at least it's closer to fiat money than it is to anything else.
According to Wikipedia you are correct. But I think you are fighting a losing battle in the crypto space where people take Fiat to mean government backed currencies.
I think of it this way especially as Fiat means 'by decree' or something like that.
You will always have the option to transact directly on the blockchain, just like you have the option to send email with hand-crafted SMTP messages. Coinbase offers convenience, take it or leave it.
That's like saying "you will always have the option to use cash. Banks offer convenience, take it or leave it". It's true but not massively insightful.
Yes but the backbone is still decentralised. It is very real possibility for one person to make wallet or a service on blockchain and be part of the network.
It is very hard to be part of the traditional banks network. We can debate if it is better that there is much higher cost to entering but overall if the backbone is open then it should help innovation.
The backbone is still decentralized. Banks and centralized payements systems based on cryptocurrencies with a decentralizer backbone is actually the best outcome imo.
Why do you think that a decentralized backbone is the best outcome?
I can understand that there are multiple scenarios where a decentralized cryptocurrency has some advantages for a direct end-user, and some market failures where customers can't get appropriate payment services; however for the "institution-to-institution" backbone I see no advantages whatsoever, the settlement channels which financial institutions can use are quite good and fit the needs of these institutions much better than (for example) Bitcoin; the interbank settlement systems are fast, cheap, reliable, secure, already implemented and tested, work on a large scale and they don't really have a trust issue with their operators.
There are many flaws in worldwide payment systems available to customers, but the backbone between institutions is not one of them.
Good question! The most important aspect of this re-org is that people can choose to take part of the system without a bank, or both. There are many other benefits though, transfers between accounts would be easy peasy, everyone would be capable of auditing logs and transactions (that's a wet dream for an external auditor), etc.
Can you elaborate on what you mean by "transfers between accounts would be easy peasy" and "everyone would be capable of auditing logs and transactions" ?
To my understanding this is something that can be covered by common standards on message formats that businesses can send to banks (the same format for many banks, integrated in, say, accounting software) to initiate payments, and by common standards for electronic account transaction information and a legal requirement to ensure that all banks would provide that interoperability. And getting that doesn't need decentralization but rather a legal/systematic intervention like SEPA was done in Eurozone.
Direct participation in payment systems for non-banks is also an option that already exists, but not widely used because of the costs involved, it's cheaper to just go through a bank - if you don't have huge volumes any bank can give you a quote that's lower than the cost of maintaining the service directly, and the businesses that do have huge volumes (e.g. the major auto manufacturers) generally have established their own bank subsidiaries.
> this is something that can be covered by common standards
Theoretically, but this has been a failure since forever. I've been moving countries a lot in my life and the hassle is real. Transferwise makes things easier but it's recent, slow and still is a middle-man you could get rid of with cryptocurrencies. With cryptocurrencies a simple transaction would suffice.
> Direct participation in payment systems for non-banks is also an option that already exists
I was not aware of this. I doubt it's realistic though, whereas right now I can (and do) send money to people via cryptocurrencies without a need for a bank.
I think the reason I'm getting downvoted on these posts is that people don't realize how banks interaction and money transfers are broken as soon as you travel and move in the world. Here in the UK banking is really easy thanks to Monzo and Revolut, but go abroad and it already becomes a mess. More and more people are going to have these problems as world travel becomes more efficient and cheaper.
Yeah okay, this doesn't work when moving between significantly different markets, all the decent solutions tend to be designed for centralized markets (by necessity, you'd want at least the laws to be compatible) and the standards work for switching between institutions in that market (or using multiple institutions at once) but not for relocation, unless it's between USA states or Eurozone countries. The global situation is quite fragmented. A good solution that works in Germany won't work in Singapore, and vice versa.
However, I'd wager that it still counts as a small niche for payments - even if we take all expatriates into account (though those who have relocated for years are essentially part of the local market), that is estimated to be something like 50-60 million people worldwide, so less than 1% of individuals (it's worth noting that businesses of various sizes, not individuals, make up most of payments) so experience and needs of people who move around the world (beyond short-term business and tourism) are unusual and do not reflect the needs of the mainstream market. Even if extended travel becomes much more popular (which is not a given, there is a trend in restricting migration), it might go from 1% to 2% of population and still not affect the larger trends.
I was one of those people that said "You're destroying crypto!"
Because frankly they've been the primary source for identification data in the blockchain space. They violate the basic principle of privacy, by pinning every coin that goes through their platform to the official registered natural person names of the humans that are for some reason responsible for that money.
This establishes a chain of responsibility. A policeman may ask "you transferred the coin out of coinbase, didn't you?" and you either answer whom you sent the money, admit to the crime paid for with it at some point, or volunteer for 'obstruction of justice'. Now queue Trumpian illegalogics.
Honestly this world is sick. It's sick because reality isn't honorable. It's sick because we pretend it is, lie and deceive to make it so. It's sick because when we do fail, it is so unimaginably horrible, yet passes like a slow breeze.
Coinbase guy "I guess Coinbase just isn't for you"
No shit sherlock. Guess they're happy 'freedom' gives them the ability to deceive, misguide and subject to money extraction person by person. They must be happy to receive from the governments the required protection against justice - that no good man has the right to do it. That money alone guides the believes of society, and I should simply sit back and watch the spectacle:
THE TOWER OF BABEL
where we stop to understand one another, where value and meaning take on forms beyond describable abstraction. You are given believes, find meanings, all calculated ahead of time to confuse your outcomes, and give you meaning where there is none. To allow you to operate as a perfect cog for a machine that's nobody's at all, serving nothing.
They are building all this on very weak foundations. The assumption is that all these services built on top of crypto currencies will somehow be more efficient than existing systems.
They are not. It takes more time and electricity to confirm a BTC transaction, therefore it's slower and more costly.
Those shaky foundations mean that the actual winners may be other fintech companies like Revolut, Stripe or TransferWise who are not distracted as much by the whole crypto mania.
Bitcoin is not the only cryptocurrency, and there are forms of distributed consensus in which the economic commitment is denominated in the currency itself (proof of stake) rather than any real-world resource like the computation required for proof of stake.
Ethereum will likely operate on proof of stake within two years.
I didn't read the article because I'm not interested in crypto, but I love "Move deliberately and Fix things."
I love that it implies that you know where you are going and making steady progress towards that. It also subtly acknowledges that you are building on the work of others, and that bugs happen. It's OK, but fix 'em when you find 'em.
There's a lot of reasonable reasons to dislike cryptocurrencies, and I say that as someone who's all-in on them. It's kind of like atheism in 1750's Europe -- it makes perfect sense on its own terms, but it threatens to upend a seemingly critical social governance mechanism.
There are also serious technical flaws, but I think there's a good chance those can be addressed.
A thousand times this. I don't mind if they mine crypto in Iceland or Quebec where they have 100% renewables but a lot of crypto mining is done using coal. In my opinion, fixing our planet should have a higher priority than inventing a new currency. If they'd at least use the money from BTC to fish plastic from the oceans I'd be fine, but currently it's just benefiting some large mining operations and hardware manufacturers.
IDK, we've had "money over IP" with cryptographic signatures for decades already in various financial exchange protocols, with the main difference from Bitcoin being the requirement of pre-existing trust relationships.
However, since the vast majority of people and institutions do have some pre-existing trust relationships, Bitcoin doesn't bring that much to the table, we already had the technology to wire money worldwide.
Writing your own transaction messages and injecting them for execution to whatever banks hold your money is a standard, widely used product of classical banking, not some novelty. Ages old cash management services and accounting system integrations run off of that ability. It's not P2P, but it remains to be seen if P2P by itself is a worthwhile benefit.
You still need an agent in classical banking for that transaction, even if the agent is just the bank's server.
I'm my own agent and an international network is the bank. Classical banking can't compete with that in the long run though I'm sure they'll still be of use.
Can you elaborate why exactly can't that compete in the long run?
I'm sure that there are multiple niche use cases where being your own agent has some benefits and it will certainly be of some use, but it seems that for the mainstream usage it does not, and there are certainly all kinds of practical advantages for some centralization and delegation of tasks to another agent, so it seems quite plausible to me that the classical banking might dominate the majority of transactions forever.
> I doubt anyone would ever launch a war funded on Bitcoin.
Why do you think that? You can store a lot of bitcoins on a single sheet of paper (private keys for wallets) so stealing it is a lot easier than precious metals. If any large nation ever really starts disliking BTC they'll just launch targeted operations to get hold of a large share of Bitcoins and destabilise the system. Similar to earlier times where enemy states printed fake money to destabilise monetary systems, bitcoin makes it easier because you don't need to move physical assets.
The dollar's value derives, in great part, from the existence of the US military. It uses far more energy per year than Bitcoin does.
And...
Genuine economic activity in crypto-currencies represents roughly %0.00000000000000000000001 of the economic activity transacted in dollars. How much energy would be required for crypto-currencies in a one to one comparison?
Let's not forget the US military may in fact serve some other functions as well.
I have seen plenty of people ignore articles on HN and make it to the top. The comments are complaining about how conservatives are censored on HN, never with a sense of irony.
Isnt it hilarious to see this being touted as some new and insightful way of developing a product? CS undergrads should be forced to learn about how bridges, skyscrapers, and airliners get built.
I actually think the curriculum works directly against this. I know my homework assignments tended to be much more unmaintainable than even a one-off python script that I would hack together. It might be interesting to design a class where, instead of weekly homework, students are required to continually maintain/modify the same source over a semester. Weekly projects that will never be touched again actively discourage writing maintainable code, and I don't think that is a good lesson to be teaching.
I recall reading about a teaching system where homework involved taking submissions of previous year's students and adding features on top of that, providing students with all kinds of practical insights on what makes code easy or hard to maintain.
It depends on the context. Facebook's cavalier, exploratory attitude mostly worked because they were building an entertainment. Software development tends to be a lot more cautious in domains like finance, where errors can cause serious, actionable damage.
It's incredibly hard to scale a customer service organization as quickly as they've had to. It's definitely a growing pain that will improve - it's a good problem to have.
Coinbase is trying to create a bridge between centralized financial systems and decentralized financial systems. I can understand that some people might not like that but I think this is ambitious and necessary if we want crypto to be part of our everyday life.
Is Coinbase still using MongoDB as their primary database? Article talks about moving deliberately and fixing things but then talks about double transaction problems that weren’t fixed for weeks, something that would be easy to make impossible in an actual mature database solution.
That issue had nothing to do with their use of MonogDB (though I’m not defending that choice) and as the article mentions it wasn’t even their fault [1]
This is certainly a true statement - but there are known technologies that provide better characteristics for scale than others (looking at big scale names such as Netflix as a start). Simply writing it off as “well they scale so fast, whatever!” is completely sidestepping the issue of using knowingly error prone tech at scale, and frankly is a bit irresponsible. (Note: this isn’t a statement on what CB uses or if they’ve tuned it appropriately or not)
Keep in mind that Coinbase always had to expect being banned by other companies if they adapt a no-crypto currency. I would've been very careful putting all infrastructure on some easily scalable cloud service. You'd probably want to be able to run with at least two cloud providers at the same time (preferably two providers from different jurisdictions). That means you'll have to build a lot of scale infrastructure yourself.
Oh c'mon now, this is not 2007 first year of Twitter. I'm sure there is bunch of tools and brilliant engineers that they could handle it. My guess is, that dealing with Coinbase from pretty much non-existant customer support side, they probably have/had few junior programmers putting something semi-working together, for as long as they possible could hold on to it (and saving money of course)
Ideology aside, as a random human being, why would I care about that? I need to buy bread at the bakery, I can use cash, my "centralized" Visa or my Bitcoin wallet, all other things being equal what difference does decentralization make?
And if it's solely about principles then I have bad news.
I think most people would agree that ideologically speaking if you value privacy it makes more sense to use Duckduckgo rather than Google search, yet even though DDG now offers a quality of service comparable to the big G it still remains extremely confidential. The friction to get from one service to the other is like 3 clicks in your browser's UI, yet most people don't care.
If 99% of people can't be bothered to ditch Google search in favor of something else even though there's very little friction, how can you ever hope to convince people to switch from Visa to a bitcoin wallet which is significantly less convenient and makes it easy to irrevocably lose your money? That's a pipe dream IMO.
I’ve tried to switch to DDG a couple of times and I use it as the default search engine on my cellphone now but it’s not yet as good as Google is for easily finding exactly what I want and I doubt it will ever be because it is thanks to the very thing I don’t like about Google — the amount of things they know about their users — that Google are able to give the results that their users are looking for.
I bought a book called Relevant Search because I think that it might be possible to build a very good search engine for oneself but I have not yet had time to even start reading that book so.
I think switching to DDG is worth it even if you only lower your usage to a certain degree. It means no company has your full profile anymore.
This is all on top of the initial users, Usenet-style "cryptoanarchists" who actually got the whole network running in the first place, but who are now a tiny minority of actual users, though perhaps a majority of the people who have already made a fortune on this stuff, and thus are now leading investment in the space. In a way, these are just speculators who bought early for reasons other than money (like for example, that it seemed like a cool conceit from a William Gibson novel).
The model example for me was someone in the U.S. sending money to their grandmother in Iran. Although perhaps that’s become legal again now.
If you really just mean "remittance payments to OFAC-listed countries", then I can't imagine that's a big use case at all, especially since the first world, the source of most of these remittances, has made it pretty difficult to turn cash or legally-earned in-my-bank-because-i-cashed-my-paycheck money into crypto without a paper trail.
Also, the OFAC countries are just not the most popular places to send remittances from the west, the reason being that its just really hard to do so. This in turn reduces incentive for otherwise remittance-sending immigrants from those countries to go to the West, which in turn lowers demand for the service. If the US were to suddenly put Mexico on the OFAC list (not unthinkable given the current administration), there would be riots in the streets in both countries, because the scale of these payments mean that large fractions of both economies are built on the flow of this money (in Mexico), and the labor it motivates (in the US).
It's important to clarify that "securities fraud" here refers to what statutes refer to as securities fraud, and not any actual fraud involving securities.
Any sale of a non-registered security is termed "securities fraud" by the Securities Act, even if the sale involves zero fraud. The term, as used in the statutory context, is a misnomer, and an Orwellian attempt at misleading the public into believing there was a victim in the transaction.
Generally libertarians like the cypherpunks do not object to laws against real fraud. It's the victimless crimes like prostitution, trade in unregistered securities, drugs, etc that they believe should be free of prohibition.
Anyway, to your point, there are legal industries where traditional financial players cannot operate, like the legal cannabis industry, due to everything from corporate policies being slow to react to the change in laws, to reputational risk, to non-binding but still influential guidances and warnings from regulatory agencies (e.g. Operation Chokepoint). These also might be/become natural sources of demand for cryptocurrency.
E.g. in my opinion most people don't want irrevocable untraceable transactions from their account as that increases fraud risk and (in their particular case) doesn't bring much benefit. Some do benefit from that, but it's a minority in the general population (but a large portion of early cryptocurrency adopters). Most people actually want something like a credit card payment that has a clear benefactor and the ability to recall the payment in case of fraud or other dispute. In other cases, the value is so low people are not willing to "pay" even very low price of convenience to gain them.
There are some people (and locations!) where there is large motivation to avoid various capital controls and possibility of government control, but for most people in first world countries it's preferable to have their money in the reach of local legal system rather than outside, as they'd expect (and need!) the legal system to protect them in case of disputes and have a low risk of it working against them. Of course there are all kinds of exceptions where people might desire a way to get undeclared money (say, to avoid making child support payments) but that's usually a sufficiently large motivation only if you want to defraud someone and most people actually are honest and pay what they're due.
Also, there are all kinds of trivial reasons why you'd want an institution to handle the trade - e.g. if you're investing, you'd need proper documentation for the crypto purchase so that it'd be tax deductible for the crypto sale, otherwise the whole sale could be treated as taxable income.
I don't care if he takes a cut, I don't care if he slows down processing, but I care as soon as he starts saying "my bank doesn't allow your kind of business".
However, most centralized solutions that provide nearly instant transfers focus on one market (say, Eurozone or USA) and so they're not global - so there's no single "they" that could provide these with the caveat of higher risk, and it's a flaw of decentralization of international banking; the delays for worldwide transfers are caused by lack of a centralized solution neccessitating multiple bilateral transfers between unrelated institutions. Where a centralized system exists (e.g. Eurozone Target2 system), customers can have nearly instant payments within that system if you're willing to pay for that.
You’re commenting on this thread about Coinbase, one of the largest cryptocurrency exchanges. Seems very centralised.
I actually wonder (and I’m sure someone’s done the math), what would be the transaction cost and confirmation times of the Bitcoin network if it approached the number of transactions as the Mastercars or Visa networks?
It's the purest form of expressed preference - if people systematically give up A to gain B, then it's clear that they actually don't desire A that much and that they actually do desire B, no matter what they might say.
The same applies to Coinbase - all this implies that for many, many users decentralization is not a feature that's desirable enough to matter, that it's benefits are not noticable and not important enough to make it a serious factor in making their decisions; whatever "the decentralization vision" is, it's not relevant enough so that they'd be willing to give up other benefits to gain these of decentralization.
The qualifier about perfect information and comprehension is legit, but given that, if you'd choose decentralization only if the cost and other circumstances are equivalent then that's a sign that decentralization is worth zero.
Sure. But why are alternatives so scarce or difficult?
Because federal and state governments are going out of their way to attack any non-banklike means of converting fiat to cryptocurrency. From heavy regulation (see: New York) to arbitrary abuse of unrelated regulation in form of police action (localbitcoin sellers atttacked and jailed under KYC). This funnels people into players that are willing to bend over for the establishment like Coinbase.
However, for the majority of people, obeying local laws (including AML/KYC regulations) is simply a part of their normal not-being-a-criminal life, not "bending over for the establishment"; they don't need anonymity and payment-censorship resistance and have no problem if their service provider complies with the law, so if the main advantage for some means of converting fiat to cryptocurrency is simply avoiding these regulations, then that provides no added value (and possibly negative value i.e. risk) to them, and they would reasonably not choose that.
There could be all kinds of non-banklike decentralized means of converting fiat to cryptocurrency, but there's some self-segmentation - if some seller would be obeying AML, KYC and IRS cash reporting regulations, then they might as well be banklike, since they'll be competing with banklike institutions, and if not, then yeah, that's a crime and would naturally be attacked by governments and avoided by a large portion of honest citizens. There are certain niche markets for whom it's important to be beyond the reach of the law, but that's not a need for most people, for most people even a decentralized solution would have to obey all the relevant KYC and other laws if they'd be comfortable in using it. A professional buyer/seller on localbitcoin is very much comparable to a smaller version of Coinbase with less reputation and thus needs to offer some advantage so people would pick them instead of Coinbase, and I'm struggling to see what that advantage would be other than evasion of regulations. It's clear that decentralization can help with that, but can it help with something else, something that a law-abiding consumer cares about?
One can argue about the details of regulation and licencing, but even if they would be relaxed to facilitate operation of small decentralized players, in any case the "above board" market will have to ensure that KYC (anti-anonymity), AML (filtering) and tax reporting for any large volumes, that is not negotiable; and the "underground" market that avoids that won't be attractive to most customers because of the risks involved by, as you say, governments attacking it and jailing operators.
If it were possible to avoid banks altogether, for sound money to exist, and for governments to subsequently be less all-powerful, I'd be all for crypto. However, I don't believe in fairy tales.
[1] https://coinmarketcap.com/charts/#dominance-percentage
2. There's no one fixed "mantra" of cryptocurrency. As you point out yourself, there's some people who see BTC as a store of value first and optimize for that, and I'm sure you're aware that that's at least not an uncontroversial decision. Different people have different opinions about a ton of different things like monetary supply policy, the importance of censorship-resistance, immutability, non-currency use-cases, etc.
The most decentralised is something like localbitcoins, but for most people its too much hassle. It's like selling a second hand car type process (which most people hate) just to get cash to spend. Therefore a centralised bank it much more preferable.
[1]: https://open.buffer.com/getting-paid-in-bitcoin/
[2]: https://twitter.com/nieldlr
1. Pay employee in Venezuelan bolívar 2. Bolívar inflates to the point where a month's salary gets you a chicken bone 3. Employee __________
Finance is something everybody uses. Blockchain/cryptocurrency gives you a whole next level of being able to do it.
And blockchain/cryptocurrency is about administrative efforts much more than it is about finance. Finance is just a very delicious application in a world that only gets hard for money.
I think of it this way especially as Fiat means 'by decree' or something like that.
It is very hard to be part of the traditional banks network. We can debate if it is better that there is much higher cost to entering but overall if the backbone is open then it should help innovation.
I can understand that there are multiple scenarios where a decentralized cryptocurrency has some advantages for a direct end-user, and some market failures where customers can't get appropriate payment services; however for the "institution-to-institution" backbone I see no advantages whatsoever, the settlement channels which financial institutions can use are quite good and fit the needs of these institutions much better than (for example) Bitcoin; the interbank settlement systems are fast, cheap, reliable, secure, already implemented and tested, work on a large scale and they don't really have a trust issue with their operators.
There are many flaws in worldwide payment systems available to customers, but the backbone between institutions is not one of them.
To my understanding this is something that can be covered by common standards on message formats that businesses can send to banks (the same format for many banks, integrated in, say, accounting software) to initiate payments, and by common standards for electronic account transaction information and a legal requirement to ensure that all banks would provide that interoperability. And getting that doesn't need decentralization but rather a legal/systematic intervention like SEPA was done in Eurozone.
Direct participation in payment systems for non-banks is also an option that already exists, but not widely used because of the costs involved, it's cheaper to just go through a bank - if you don't have huge volumes any bank can give you a quote that's lower than the cost of maintaining the service directly, and the businesses that do have huge volumes (e.g. the major auto manufacturers) generally have established their own bank subsidiaries.
> this is something that can be covered by common standards
Theoretically, but this has been a failure since forever. I've been moving countries a lot in my life and the hassle is real. Transferwise makes things easier but it's recent, slow and still is a middle-man you could get rid of with cryptocurrencies. With cryptocurrencies a simple transaction would suffice.
> Direct participation in payment systems for non-banks is also an option that already exists
I was not aware of this. I doubt it's realistic though, whereas right now I can (and do) send money to people via cryptocurrencies without a need for a bank.
I think the reason I'm getting downvoted on these posts is that people don't realize how banks interaction and money transfers are broken as soon as you travel and move in the world. Here in the UK banking is really easy thanks to Monzo and Revolut, but go abroad and it already becomes a mess. More and more people are going to have these problems as world travel becomes more efficient and cheaper.
However, I'd wager that it still counts as a small niche for payments - even if we take all expatriates into account (though those who have relocated for years are essentially part of the local market), that is estimated to be something like 50-60 million people worldwide, so less than 1% of individuals (it's worth noting that businesses of various sizes, not individuals, make up most of payments) so experience and needs of people who move around the world (beyond short-term business and tourism) are unusual and do not reflect the needs of the mainstream market. Even if extended travel becomes much more popular (which is not a given, there is a trend in restricting migration), it might go from 1% to 2% of population and still not affect the larger trends.
Because frankly they've been the primary source for identification data in the blockchain space. They violate the basic principle of privacy, by pinning every coin that goes through their platform to the official registered natural person names of the humans that are for some reason responsible for that money.
This establishes a chain of responsibility. A policeman may ask "you transferred the coin out of coinbase, didn't you?" and you either answer whom you sent the money, admit to the crime paid for with it at some point, or volunteer for 'obstruction of justice'. Now queue Trumpian illegalogics.
Honestly this world is sick. It's sick because reality isn't honorable. It's sick because we pretend it is, lie and deceive to make it so. It's sick because when we do fail, it is so unimaginably horrible, yet passes like a slow breeze.
Coinbase guy "I guess Coinbase just isn't for you"
No shit sherlock. Guess they're happy 'freedom' gives them the ability to deceive, misguide and subject to money extraction person by person. They must be happy to receive from the governments the required protection against justice - that no good man has the right to do it. That money alone guides the believes of society, and I should simply sit back and watch the spectacle:
THE TOWER OF BABEL where we stop to understand one another, where value and meaning take on forms beyond describable abstraction. You are given believes, find meanings, all calculated ahead of time to confuse your outcomes, and give you meaning where there is none. To allow you to operate as a perfect cog for a machine that's nobody's at all, serving nothing.
They are not. It takes more time and electricity to confirm a BTC transaction, therefore it's slower and more costly.
Those shaky foundations mean that the actual winners may be other fintech companies like Revolut, Stripe or TransferWise who are not distracted as much by the whole crypto mania.
Ethereum will likely operate on proof of stake within two years.
Various DAG mainnets are launching or have launched and are operational today.
I love that it implies that you know where you are going and making steady progress towards that. It also subtly acknowledges that you are building on the work of others, and that bugs happen. It's OK, but fix 'em when you find 'em.
An attitude that would never past muster on HN except in regards to this subject
There are also serious technical flaws, but I think there's a good chance those can be addressed.
The dollar's value derives, in great part, from the existence of the US military. It uses far more energy per year than Bitcoin does.
Bitcoin's energy usage seems a better deal. I doubt anyone would ever launch a war funded on Bitcoin.
However, since the vast majority of people and institutions do have some pre-existing trust relationships, Bitcoin doesn't bring that much to the table, we already had the technology to wire money worldwide.
We can't do that with classical banking.
I'm my own agent and an international network is the bank. Classical banking can't compete with that in the long run though I'm sure they'll still be of use.
I'm sure that there are multiple niche use cases where being your own agent has some benefits and it will certainly be of some use, but it seems that for the mainstream usage it does not, and there are certainly all kinds of practical advantages for some centralization and delegation of tasks to another agent, so it seems quite plausible to me that the classical banking might dominate the majority of transactions forever.
Why do you think that? You can store a lot of bitcoins on a single sheet of paper (private keys for wallets) so stealing it is a lot easier than precious metals. If any large nation ever really starts disliking BTC they'll just launch targeted operations to get hold of a large share of Bitcoins and destabilise the system. Similar to earlier times where enemy states printed fake money to destabilise monetary systems, bitcoin makes it easier because you don't need to move physical assets.
And...
Genuine economic activity in crypto-currencies represents roughly %0.00000000000000000000001 of the economic activity transacted in dollars. How much energy would be required for crypto-currencies in a one to one comparison?
Let's not forget the US military may in fact serve some other functions as well.
Banks now: "lol jk. No Bitcoin for you."
1. https://blog.coinbase.com/joint-statement-from-visa-and-worl...