[My own answer is: "yes", in the short term, and "maybe" for the longer term.]

It would appear, based on the news this week, that major world governments like the US and others are cracking down on the notion of "government-proof privacy", and prosecuting companies and individuals who facilitate money transfer that cannot be potentially traced by a government. They are going after mixers and brokers who do not adequately engage in KYC.

In short, it would seem that governments are trying eliminate the very thing that Bitcoin--and blockchain generally--was originally designed to accomplish.

What does this mean for the long term prospects for cryptocurrencies? Will blockchain survive losing it's original purpose?

My own answer is: "yes", in the short term, and "maybe" for the longer term.

I have written before about different kinds of "privacy" that people might want, and most want privacy from other citizens, from companies, and from criminals: privacy from a targeted investigation from the government is a level that, in my estimation, a "nice to have" for most people, but not a dealbreaker.

Hence in the short term, cryptos missing their original purpose is not something most consumers care about. Most holders of Bitcoin these days do so in a centralized way, e.g. with an app or a broker that keeps their account under their name, in a centralized database.

As for the longer term, this brings up an important question: why use blockchain at all?

Blockchain is slow and expensive to transact in on purpose because of proof-of-work and decentralization. No cryptocurrency will ever come even close to scaling to the billions of transactions each day by people worldwide.

But a digital currency that is not blockchain-based can accomplish this and provide the same mechanism for speculation and value store that blockchain-based currencies provide. In my opinion, the long-term future of the actual blockchain architecture behind today's cryptocurrencies is... unclear.

This came up as a side discussion in another thread, and I thought it would be interesting as a top-level discussion here.

The notion is this: although taking over 50% of the Bitcoin hashrate would be a practical impossibility for any private actor or even a small country, China, as a country, has at times hosted over 50% of Bitcoin's hashrate, and it's thus plausible they could make this happen again if they wanted to.

And whomever controls over 50% of the hashrate can dictate the software in use, and/or dictate the contents of the blockchain. As the theory goes, if China wanted to wreak havoc on the world economy, or if it wanted to extract a ransom, or if it simply wanted to profit by inserting its own blocks, then... it could. They could do anything. Perhaps China could decide that Satoshi's blocks should be given away to charity. Maybe they change the architecture so that it worked better in China, or conformed to their "laws" or something.

So this brings up questions:

1. Is this technically possible?

2. What would be the technical implications of China doing this?

3. What would be the geopolitical implications?

4. What would this do the broader cryptocurrency sector?

5. Have major governments e.g. the US and NATO countries ever (publicly) announced any contingency planning around this problem? Putting a $1.5T asset at risk is something that could rattle the entire world economy. This seems like something they would at least think through?

Looking forward to people's thoughts...

In human history, politics often does strange things to the progress of technology, often leaving us stuck with obsolete methods and inefficient markets for far too long.

To take two examples, there was the original AT&T monopoly, in which the US government gave AT&T a total monopoly on telecommunications in the US. When the laws were changed and AT&T was finally allowed to break up, this new thing (you might have heard of) called the "Internet" sprang into life. Another example is the regulation of airlines back in the day, which kept ticket prices high and flexibility low.  And there are no doubt thousands of other examples.

The point here is this: sometimes the reason we don't innovate as a society can be chalked up to "politics".

Today, I see the same thing happening with the popular public discussions of the US offering a digital currency.

Physical paper and metal currency is an anachronism in the year 2024. Digital devices are ubiquitous today, and we're getting to the point where retailers are refusing to use this old means of value transfer because it is less safe and more expensive to administer. Physical cash, in other words, is going the way of horses for transportation and US mail for the sending of letters.

It would make sense, therefore, that the US government quickly move to creating a digital version of the US Dollar. Eventually, it should actually eliminate paper and metal currency entirely because this is expensive and cumbersome to operate.

And yet there seems to be a lot of political "noise" around this very obvious technological change--as if changing the technical means of moving US Dollars around will somehow change American society or something. I simply don't get that.

What is wrong with the US replacing paper and metal instruments with a digital one? What are the arguments against a USD CBDC?

Today, I'll offer the forum a thought experiment.

Imagine that one day, the core devs of Bitcoin would come to a consensus that:

• Today, Bitcoin is simply an investment and value store, not a "currency" for most of its users.
• Today, most holders of Bitcoin do so in a centralized way, e.g. with a broker or an app.
• Bitcoin has failed its original purpose of being able to thwart government subpoenas since it is subject to chain analysis (and hence has opened the door to competitors like Monera for this niche need).
• Bitcoin could never become a mainstream currency since it was intentionally designed to be slow and expensive.
• With so much adoption and awareness from its popularity as an investment instrument, Bitcoin could become a mainstream worldwide currency if it were made to be fast and cheap, allowing it to be used for everyday transactions e.g. a parking meter or a cup of coffee.
• Mainstream adoption of Bitcoin like this would probably send the price of Bitcoin into orbit.
  
  

The only way that you could make Bitcoin fast and cheap enough to transact such that it would be superior to (say) ordinary credit card transactions would be to centralize the architecture. In other words, instead of a consensus algorithm among thousands of anonymous servers, Bitcoin would be backed with an architecture controlled by a single legal entity and a trusted set of servers, eliminating the need for proof-of-work and eliminating vast amounts of complexity to the system, immensely streamlining Bitcoin transactions.

In this scenario, Bitcoin could truly take over as a worldwide mainstream currency, with consumers replacing their everyday transactions with Bitcoin transactions.

However, also in this scenario, Bitcoin would lose some of its "mythology" or "religion" since it started as a way to transact without the possibility of a government discovering the parties of its transactions.

But in this scenario, almost all of Bitcoin's current users--and millions (or potentially billions) more--would only notice that Bitcoin is very fast and very cheap to transact with, and that millions of ordinary vendors now accept Bitcoin as retail payments, for instance.

All it would take is for Bitcoin's core devs to change their minds.


Could this happen? If not, why not?

Hello folks. I was hoping to get advice on for the best exchanges for altcoins. I'm very interested in brokers who can take in USD or Bitcoin in exchange for the newest/hottest relatively undiscovered altcoins out there. I'm well aware of the "big" players like Binance and CoinBase, but I'd love to hear about some of the smaller ones that people think are worthwhile.

When it comes to blockchain-based NFTs, I'm trying to answer one question: why?

What is the actual added value of an NFT versus a plain old contract between two known entities as is done in traditional digital content marketplaces?

You might say that the difference is that the transaction can be done anonymously, but since NFTs are essentially legal contracts, and contracts require known identities to hold up in court, then it would seem as though an NFT itself doesn't add any value, since you need to add identity to the contract anyhow, at which point there's no added value to using an NFT.

What am I missing here? Why use an NFT when the NFT, by itself, is technically worthless, and a valid transaction without the blockchain aspect of the transaction is the same as the value with it?

In other words, couldn't you just enter into the same contract the NFT specifies with the real names of the parties, and accomplish the same thing, but without the added complexity of the blockchain stuff?

Can somebody who knows the NFT business tell me what I am missing?

[https://www.youtube.com/watch?v=vgjS_7eNoOg]

I'm not usually one to start political threads like this, but I feel like this part of the board needs a little.... balance?

Here's Fox News clips describing Trump's behavior and demeanor, pointing out how old, decrepit, bumbling, idiotic, senile, moronic, and utterly lost he is when presented with anything complicated:

https://www.youtube.com/watch?v=vgjS_7eNoOg

This man is absolutely not fit to be president on the purely cognitive level. (And don't forget "person woman man camera TV").

Contrast this with Biden the other night manhandling MTG with an ad-libbed conversation on the floor of Congress in front of 100 million people. Biden is a lousy public speaker and always has been (he has a stutter for chrissakes), but he clearly has fully functional--and very sharp--mind when it comes to understanding the complex problems that face our country.


(Also, for balance, here's a bunch of BOLD OVERSIZED TYPED and a giant wall of text)


[omitted]

(Okay, I'm done  )

Here's another reminder that the blockchain architecture is not the only game in town when it comes to creating a digital currency:

Philippines to launch non-blockchain CBDC in two years

From the article:

“Other central banks have tried blockchain, but it didn’t go well.”

My take on this:

"Centralized blockchain" is a technical oxymoron and is a pointless waste of time, money and resources. Central banks--and central anything--should not use blockchain because they don't need this added complexity that will raise the cost to consumers while not adding any value. The blockchain architecture's sole incremental benefit--thwarting government oversight into transactions--is a feature that is only interesting to certain users in certain situations (e.g. public cryptocurrencies like Bitcoin).

Just because Bitcoin has become an incredibly popular investment doesn't mean the technology behind it is the solution to everything.

I just wrote another Medium article on Central Bank Digital Currencies (CBDCs).

Here's the gist of it:

Using blockchain to create a CBDC is a waste of time and resources, and will lead to the CBDC project failing.

CBDCs, by definition, are centralized in terms of their governance. It makes no sense for a central bank to use a technology designed principally to evade centralized oversight. In short, if it weren't for the problem if evading centralized oversight into transactions, then Bitcoin would have never been invented.

Decentralized architectures cannot scale to mainstream transaction volume. This is underscored by Bitcoin's transactions that can cost 30 dollars and take 30 minutes to complete. Credit card transactions take a few seconds and typically cost less than a dollar. Haypenny currencies take single-digital milliseconds to complete and cost $0.005. Blockchain, in short, is a terrible choice, technically speaking.

And then there's the usage model, which requires users to have a key pair, which hinders the spread of the currency and makes the whole process much more clunky for end-users, which is especially problematic when introducing a brand new way of doing things to millions of users used to doing it the old way.

In short, from a pure technology and user experience standpoint, using blockchain for a CBDC is bonkers. CBDCs should instead be based on a traditional centralized architecture.

[facts]

There's a lot of disinformation and incorrect notions going around about the legality of Bitcoin, cryptocurrencies and digital currencies.

Here is a good place to start if you want the facts about Bitcoin's legality:

Legality of cryptocurrency by country or territory

What you can learn from is that for almost all purposes, Bitcoin (and by extension cryptocurrencies and digital currencies) are not meaningfully curtailed by government regulation on individuals. Even China's ban on Bitcoin hasn't stopped Binance from trading $90 billion per month there. Based on this, you would be hard-pressed to find a civilized country where you could be put in jail for owning or trading Bitcoin. They exist, but they amount to a tiny fraction of the world's economy.

And yet in the face of these facts, a near constant refrain from many crypto enthusiasts is that the reason Bitcoin hasn't replaced the world's sovereign currencies like the USD and the Euro is because there's a conspiracy of government regulations to stop it. They can't point to how exactly this works, but more importantly, they seem to ignore the fact that Bitcoin transactions can take 30 minutes to complete and cost 30 US dollars, making the transaction unthinkable for all but a microscopic fraction of worldwide daily transactions. And while more centralized blockchain-based approaches improve this situation somewhat, they are still orders of magnitude away from the scalability necessary, and the key pair requirement for end-users is clunky and makes it hard to adopt.

When I first designed the Haypenny transaction platform, my first task was to calculate the number of monetary transactions going on in the whole world on any given day, and then calculate that number for peak times of the year (e.g. Christmas), and then multiple that by a factor for the peak hours of the day, and then multiplying that by a factor of five to account for "peak-second" loads (yes, my professional background is whole-internet scale systems in case you couldn't tell ).

The number you arrive at when you do these calculations is that you'd need a system that could handle a transaction load in the signal-digit millions of transactions per second if you wanted to replace daily credit card and physical cash transactions worldwide. And you'd need to handle several hundred billion transactions a month.

That is what is required for a currency to replace the current status-quo, and Bitcoin and other blockchain-based cryptocurrencies can't do it, and they can't even get close.

And it should go without saying that transactions would need to cost far less than today's transactions in order to replace the status-quo: people don't make a major change to their long-held behavior unless there is a significant incentive to do so.

And then there's the usage model. Not only does any new technology that replaces the exact functionality of an existing one need to be far cheaper in order to have a chance, it needs to be easier for end-users, too. Requiring every consumer to have a private key is something we've been dreaming about since about 1994 (I was there ), but its a pain in the ass that most consumers don't want to deal with.

These are the reasons there is not mainstream adoption of Bitcoin for everyday payments, not some conspiracy by "the government".

Another big Trump-related story today:

Trump owes more than $440 million in fines, damages from civil trials

I guess Trump's donors had better get cracking and send in more donations (or maybe just cease to carefully disconnect those force-clicked recurring donations).

For Putin nemesis Alexei Navalny, long-feared death arrives in Arctic prison

As expected by Navalny himself, Alexei Navalny died today. This came after long and slow torture by Vladimir Putin.

Not a good look for the pro-Putin caucus in US Congress today.

[Medium article]

Fun fact: I took a post I wrote here in the Serious Discussion forum and turned it into a Medium article.

This is an article about the kinds of anonymity we discuss when we talk about crypto, digital currency, and privacy.

Let me know what you think.

https://boingboing.net/2024/02/09/putin-barely-let-carlson-speak-then-humiliated-him.html

From the article:

"This is a hilarious [crap] show. Putin is now 28 minutes into his history lesson. This is the 3rd time Tucker tries to interrupt and Putin mocks Tucker for just being an entertainer and not a serious journalist. Tucker tries to fake laugh it off while Putin emasculates him."


Imagine how this interview is going to look in the history books...

[Haypenny]

Haypenny is the ultimate platform for altcoins, allowing anybody to create their own digital currency in just a few minutes, free of charge and completely private. By leaving the technical platform to us, currency creators only focus on what they do best, which is to create a great brand and promote their coin.

Besides being able to create your own currency for free, anybody can trade Haypenny currencies using our trading system, which provides a hybrid clearing price auction and buy-it-now mechanism. All of this is connected to your totally private client-only Wallet app.

Haypenny is not cryptocurrency, and is not based on blockchain. It is a completely new paradigm in digital currency that we believe is the simplest form of numerically delineated value transfer ever devised. The paradigm is much more user-friendly than any blockchain-based system, as there are no private/public key pairs, and as such there is no notion of identity at all in the transaction system--the currency itself is completely anonymous. And the Haypenny Promise is a simple set of rules that all currencies on the platform will follow, making it a safe place for the average consumer.

Haypenny is currently in an extended beta testing period. We are doing this because we want to be absolutely sure the system is safe and effective for negotiable currencies. As such, during the beta period there is no mechanism to trade your currencies for US dollars or any other negotiable currency. (We are currently securing partnerships with online cryptocurrency brokerages in order to allow the exchange of Haypenny currencies with external ones e.g. US dollars).

Please take a look at the platform and let us know what you think. Technical folks might want to start with the the Haypenny Whitepaper or just take a look at our APIs on the Haypenny developer site.

[forces everybody to accept Bitcoin whether they want to or not]

I think a lot of people misunderstand what "legal tender" means.

Legal tender means that the government forces everybody to accept Bitcoin whether they want to or not.

Typically a country only has one currency like that, which is their sovereign national currency.

In other words, when you are asking for legal tender status, you are asking for a free, open and decentralized thing like Bitcoin should become controlled by the government because they force everybody to own it. Not only is this immoral, it will absolutely backfire because anything you force everybody to own will always end up being controlled by the government.

Understand that "legal tender" does not mean "legal". Bitcoin is already perfectly legal in most countries: you can own it and you can trade it if you want to. Even in China, where people consider Bitcoin "banned", individuals there can own it and the laws only apply to financial entities there (which are already highly regulated in all kinds of ways and there is probably a long, long list of things they cannot own).

So please stop asking for government help in proliferating Bitcoin by forcing people to accept something they don't want to accept.

And concede that Bitcoin is already legal for the most part, and governments at this point are not meaningfully "holding it back".

[what kind of 'private' do you mean?]

There are, roughly speaking, two distinct reasons one might want to keep their transactions and holdings anonymous, and because of this, most people's feelings on anonymity changes significantly when the amount of money in question goes from a "small" amount to a "large" amount.

By "small" amounts, we mean some amount of money that one would be able to lose without significantly impacting their long-term well-being. When talking about traditional money, this would be the amount one would carry in their physical wallet on their own person. This money would be reserved for convenient anonymous purchases, such as buying one's dinner from a restaurant.

By "large" amounts, we mean one's "life savings": the wealth they store for long-term safety and security. This amount would be reserved for major purchases such as a car or a house, or would be a money store to draw upon for a long period of time e.g. a retirement fund. This would be an amount of money that would be devastating to lose.

People value privacy to keep their information safe from three kinds of actors: legal, illegal, and state.

Legal actors include one's friends, family, associates, neighbors, marketers, and businesses. These are actors who seek your privacy out of curiosity or to profit from it e.g. to sell you things, or to gossip about your activities, or to make a judgement about your character. One typically keeps things private from legal actors because they don't want to give people a particular impression about themselves (which may be out of context and wrong for instance). This sentiment is captured when one says, "it's none of your business".

Illegal actors include criminals in every form who seek to steal your money. Here it's important to point out that protection from criminals is usually indirect: you don't want to divulge something to a vendor not because you think they are criminals, but rather you don't trust them to keep your information safe from criminals.

State actors are the police who work within the bounds of a political system in order to obtain your private data. Keeping your information private from these actors is done in order to escape the reach of the law within whatever dominion one finds oneself in. In mostly free western-style democracies, this typically means what we would call "criminals" e.g. those hiding proceeds from criminal activity, or those seeking to evade their taxes.

So in summary, when one asks, "do you want to keep your stuff private?", the answer must be prefaced with, "what kind of 'private' do you mean?". There is "private" from legal actors and criminals, and then there's "private" from your government. Those are two very different things.

Most people don't have any use for second kind of "privacy": most people are not criminals or tax evaders. (This is not making a moral judgement here by using the word, "criminal" because a "criminal" living under a corrupt government is not necessarily immoral). And morality aside, most people don't want to get on the wrong side of their government for practical reasons e.g. their own personal safety.

Now we can talk about people's desire for anonymity for "big" and "small" amounts of money.

For one's "life savings" (i.e. "big" amounts), most people desire this holding to be kept as safe as possible, and, most importantly, safer than they themselves could possibly keep it e.g. stored by an entity that specializes in storing wealth as a service, such as a bank or financial institution.

Further, when one purchases a "large" item like a house or a car, then people want that purchase to be non-anonymous because they wish for the ownership of that item to be based on their indelible identity and not simply their physical possession of the item, which can be easily lost or stolen. One buys such a major purchase, "in your name" so to speak. This is the very opposite of anonymity.

For "small" purchases, most people want the opposite: they would prefer to use an anonymous means of transacting to maintain the "privacy" from legal and illegal actors.

In both of the above cases, there is an exception for criminals who wish to keep their privacy for illegal reasons (again, the caveat above as to what constitutes "illegal" applies).

What This Means for Cryptocurrencies and Digital Currency

Within the context of a mostly-free, mostly-just government, anonymity is desirable for "small" purchases and holdings, and undesirable for "large" purchases and holdings.

Hence, what the world needs is an anonymous means of value exchange and holding for small amounts, whereas that need, paradoxically, reverses itself when the amount becomes larger.

In that context, today's cryptocurrencies, in terms of their fit for the marketplace, have it exactly backwards: the (decentralized) blockchain architecture necessarily incurs a high cost in terms of time and money, making it unsuitable for small transactions--which is why it is rarely used for such transactions. On the other hand, for "life savings" level holdings, cryptocurrency's anonymity is usually undesirable and this can be seen in the fact that most investors of cryptocurrencies do so with the use of a centralized institution e.g. a brokerage or app, and they keep their holdings "in their name" instead of by physically holding a private key.

What is needed, therefore, is a digital currency that is suitable for very small transactions and yet keeps these small transactions completely anonymous. This currency does not need to evade government actors and therefore can be centralized, but it does need to evade all other actors unlike a traditional credit card transaction.

This is what we sought to do with the Haypenny system, which is the simplest and most anonymous form of numerically-delineated value transfer every invented--as long as one defines "anonymous" as keeping one's privacy safe from legal and illegal actors and not government actors.

I'm just going to throw a contrarian view out here for discussion...

What if, by positioning Bitcoin as a serious investment that is judged along side other investments in companies, real estate, hard commodities, bonds, and so on, that the scrutiny actually diminishes Bitcoin's appeal?

Bitcoin is now having a very strong light shined upon it. In a sense, it's being exposed to daylight for the first time, no longer being in the shadow realm of boutique techie investors like it has been.

What happens when "mainstream" investors find out that Bitcoin isn't really a viable mainstream currency, and that it's really only useful as a meme investment instrument with no inherent value beyond its own name? What happens when they find out that the "decentralized" thing is just a myth, and that, in actual reality, almost nobody uses Bitcoin (or any other cryptos) that way? What if the "serious" investment managers discover that the mythology behind Bitcoin is just... mythology?

What happens, in short, when Bitcoin ventures outside of its tight community of enthusiastic anarcho-libertarians--who desperately want Bitcoin to succeed for geopolitical reasons--and it is instead evaluated, coldly, like any other investment by people who don't have that political agenda?

And what if the first impression of millions of mainstream potential investors in Bitcoin is that it's just a super-volatile asset that only seems to go down in price?

[not received an answer]

I've posed this question before in the "unserious" sections here, and posed it in a couple of other places on the Internet as well and thus far I have pointedly not received an answer so I'll post here.

The question is, what is an example of an IT design win for blockchain technology that is not associated with cryptocurrency or NFTs.

I am looking for specific examples, not handwaving "people in the xyz industry love blockchain" or "CEO xyz says they want to build stuff with blockchain", and I am looking for end-user solutions and not tools e.g. what Amazon, Microsoft et. al. offer to developers in order to produce a real-world solution.

Ideally, I'd like to see something written up with an ROI analysis, and demonstrate why implementing blockchain made the project better/faster/cheaper/etc. versus doing the project without blockchain.

I'm going to try to be a bit provocative here and ask, pointedly:

Why hasn't anybody been able to answer this?

I'm on my way to concluding that... there is no such design win, which means blockchain is... only useful for cryptocurrencies and NFTs and nothing else.

But I could be wrong. My search for evidence continues...

Is there some metric or study somewhere that could let us know how many individuals (individual humans) currently hold Bitcoin as an asset? Are there any metrics that could approximate the number? Estimate change over time?

I would think this would be a key metric in understanding the market.