Blockchain Remains, and Will Forever be, a Dire Grift [...]

[ABCbits]

I never heard about this person previously. But for someone who write long article and claim as president of consulting service, it's a shame this article contain some major flaws. For example, he say "Blockchain’s Sole Use Case? A Killer App for Criminals" without acknowledge,
1. Many people use cryptocurrency for non criminal usage. It could be from mere investment, paying goods, protecting some privacy or even protect themselves from hostile government (e.g. Women who use cryptocurrency in Afghanistan).
2. Some research and government hearing acknowledge many criminal still prefer fiat.

So i would advice other people not wasting their time to read this article. Note that i'm not blaming OP for sharing the link.

[legiteum]

I never heard about this person previously. But for someone who write long article and claim as president of consulting service, it's a shame this article contain some major flaws. For example, he say "Blockchain’s Sole Use Case? A Killer App for Criminals" without acknowledge,

1. Many people use cryptocurrency for non criminal usage. It could be from mere investment, paying goods, protecting some privacy or even protect themselves from hostile government (e.g. Women who use cryptocurrency in Afghanistan).

2. Some research and government hearing acknowledge many criminal still prefer fiat.

So i would advice other people not wasting their time to read this article. Note that i'm not blaming OP for sharing the link.

I agree. He makes a lot of valid points about the blockchain architecture itself, and I agree with him that the hype has far outstripped the reality in the "enterprise blockchain" space. Using the blockchain for anything else but a public currency or an NFT is just plain stupid.

But like many people, he doesn't understand "virtual value": that humans place value on arbitrary things. Sovereign currencies are like this, as are digital currencies, NFTs, game tokens, Second Life real estate, and everything else. Why is a "Fruit of the Loom" t-shirt $5 and a Gucci t-shirt $500, even though they have the exact same practical use?

Humans value things... because they value things. If you think about it too hard you end up missing an important element of human nature.

All that said, I think many in the crypto business don't understand this fully either: they think Bitcoin is popular because of "screw the government" stuff (I'm overgeneralizing here for brevity). But consumers have shown that they don't care about "decentralization" as such since they mostly don't hold Bitcoin that way, and most other cryptos are essentially centralized and consumers don't seem to care.

So from my standpoint, I'm watching the blind argue with the blind here sometimes .

[BlackHatCoiner]

All that said, I think many in the crypto business don't understand this fully either: they think Bitcoin is popular because of "screw the government" stuff (I'm overgeneralizing here for brevity).

Bitcoin is popular, because it's been rising tremendously in value in the last few years. This is why it's popular, IMO. The reason it's been rising so much, is because people have figured out that it serves better as money (in the store-of-value sense). It's a pretty natural process where the best money wins, just as gold won a hundred years ago, because of its properties.

Speculation is temporary, but what endures is the technical capability to create the best form of money based on economic reality.

[legiteum]

All that said, I think many in the crypto business don't understand this fully either: they think Bitcoin is popular because of "screw the government" stuff (I'm overgeneralizing here for brevity).

Bitcoin is popular, because it's been rising tremendously in value in the last few years. This is why it's popular, IMO. The reason it's been rising so much, is because people have figured out that it serves better as money (in the store-of-value sense). It's a pretty natural process where the best money wins, just as gold won a hundred years ago, because of its properties.

Speculation is temporary, but what endures is the technical capability to create the best form of money based on economic reality.

I think we're saying the same thing here. People buy Bitcoin because they think it will go up in value, which is the same reason people might buy gold, or stocks, or whatever investment. (I started a new thread in the Serious forum a while back on the terms "saving", "investing", "speculating", "gambling"; my thesis was that all of these exist in the same continuum and blend into one another).

Some people will buy Bitcoin because they think it will give them a short term gain, and some because they think it will give them a long term gain... etc...

[d5000]

For me, he's correct in most of the first part of the article (I didn't read everything, this part is very long), because indeed the applications of "blockchain" outside of "crypto" are very limited. I still wait for the "decentralized Uber" Ethereum folks dreamt of (he mentions it briefly and correctly dismisses this model).

There is however an use case he doesn't mention as far as I aware of: Blockchain allows small startup companies to outsource some of the infrastructure risk to investors. If you start a digital platform with an utility token for your services, crowdfunding becomes easier and cheaper than via the traditional process (fiat-based crowdfunding platforms). In addition, if you have a platform which processes data but the data volume of that platform is relatively low, then a blockchain data storage solution is sometimes cheaper to maintain than a traditional server farm, because your investors will partly "pay for it" through the blockchain consensus mechanisms. It's inefficient, but sometimes it makes sense. Capital requirements for these businesses would otherwise be probably much higher.

The downside is of course that this makes it also easy to create scams or very dubious business models. But this is imo a question of education, I believe people will eventually learn whom they can trust in the token/crowdfunding sector. The situation is already much better than in the "ICO scam era" of around 2017-20.

The "is only for criminals" part can be mostly ignored, that's mainly a rant without substance and old arguments. Also "criminal for whom"? is also a question to ask. People with anti-war opinions are seen as "criminals" by the Russian government. At least half of the Earth's population live in authoritarian countries where it often does make sense to hide some transactions from the government (even if it's a $10 donation to an opposition movement).

The interesting part is the part about financial inclusion. And here the crypto community indeed should indeed ask themselves some questions. The predatory behaviour he claims to prevail in several parts of the crypto business does exist. However, it's mostly found in the altcoin sector. Terra/Luna was an outstanding example. In the case of Bitcoin, we have our "permabulls", like the Stock-2-flow group, which can of course be at least considered "misleading" (in the best case "naive"), but they aren't nearly as prevalent as the scams in the communities surrounding centralized altcoins.

And the volatility argument does also matter, it is a quite interesting challenge to solve. But what's the alternative? To wait until all governments of the world create tools for financial inclusion based on banking? Crypto is just easier. Even if you have to rely on stablecoins if you want stability, for now.

By the way, the 130 likes or so he got for the article aren't exactly overwhelming ...

[fruktik]

is his opinion supposed to matter
Wrote almost 12K words and all is on how Blockchain is slow,Insecure, spreadsheet, non scalable and offer limited utility.
Definitely someone who sees Blockchain as only recording data publicly and nothing more.
Disadvantage of been lost in your own world and not realising it.

So why should I read this nonsense about blockchain being a scam, fraud, and all that stuff? Well, it happens. A person gets melancholy and pours it out in some crazy text. This is reading for those who are completely unfamiliar with this world and have no idea about it. We all understand perfectly well how everything works and why it is needed. Cryptans will not argue that blockchain technology is a new universal financial product that has found its niche.

[legiteum]

[...]
And the volatility argument does also matter, it is a quite interesting challenge to solve. But what's the alternative? To wait until all governments of the world create tools for financial inclusion based on banking? Crypto is just easier. Even if you have to rely on stablecoins if you want stability, for now.

What do you mean by "financial inclusion" here?

[NotATether]

*opens the link*

*checks that blockchain is being called a spreadsheet*

*immediately closes the tab*

For real. He didn't even call it a database. This is like throwing the baby out with the bath water.

[d5000]

What do you mean by "financial inclusion" here?

Tools to participate in electronic transactions, e-commerce and wealth building (e.g. purchase of securities) for literally everybody, including the homeless and other marginalized groups. In some countries most people do have access to basic bank accounts already, often due to government action. But these accounts can be very expensive (e.g. Europe) and restricted. And when it comes to wealth building, the barriers are often even higher: for example, many banks expect a minimum investment for saving.

And there are many countries where this still isn't the case. Or you have stupid barriers, like that you can't open an account in a country because you're a foreigner. Let's not even begin with stateless people ...

I'd say in general the situation with financial inclusion has improved in recent years in the banking sector, due to tools like "microinvesting" being available in some countries. But cryptocurrencies really deliver the point that you only need a software and a device with Internet access (in theory, with offline solutions like "crypto cards" and "Casascius coins", you don't even need Internet access, but these are more expensive and you need an intermediary). You don't even need to have a nationality.

The problem of crypto is that currently due to volatility of "common" cryptocurrencies you often need stablecoins and thus other intermediaries (de facto banks), but these are open for almost everybody in the world (with the exception of sanctioned people, for example, in the case of USDC/USDT and similar coins).

[legiteum]

What do you mean by "financial inclusion" here?

Tools to participate in electronic transactions, e-commerce and wealth building (e.g. purchase of securities) for literally everybody, including the homeless and other marginalized groups. In some countries most people do have access to basic bank accounts already, often due to government action. But these accounts can be very expensive (e.g. Europe) and restricted. And when it comes to wealth building, the barriers are often even higher: for example, many banks expect a minimum investment for saving.

Many countries have solved this, including much of the poorer countries. Heck, about 20 years ago I implemented a project doing payments in the Philippines using nothing but an old text-only dumbphone. In this scenario people would pay physical cash to charge up their phone chip and then use it for digital payments. No bank account or anything else was required.

And that was 20 years ago. There are a ton of new products out there now.

To solve this particular problem, quite frankly crypto is not only not necessary, it's needlessly complicated.
 

And there are many countries where this still isn't the case. Or you have stupid barriers, like that you can't open an account in a country because you're a foreigner. Let's not even begin with stateless people ...

The detractors of Bitcoin like the article linked in the OP here probably assume we are talking about mainstream payments and the top 95% of the world's transaction volume from the standpoint of dollar volume. I don't agree blockchain-based crypto is, generally speaking, a great solution (or at minimum, would be equivalent to other non-blockchain solutions), but regardless, you are talking about a pretty tiny market here, from the standpoint of dollar volume.

The problem of crypto is that currently due to volatility of "common" cryptocurrencies you often need stablecoins and thus other intermediaries (de facto banks), but these are open for almost everybody in the world (with the exception of sanctioned people, for example, in the case of USDC/USDT and similar coins).

Yes, there are those who, for good reasons and bad reasons, must use a government-proof currency in order to transact lest they be prosecuted. Today, realistically, only Monero et. al. really does that, or Bitcoin in addition to a mixer and other tradecraft. Put it this way: if you needed to hide your transaction from your government under pain of imprisonment or worse, you probably would only trust a scant few methods for this.

But that market is really, really small.

Surely agent Satoshi () did not design Bitcoin to be a means of value transfer for the billion+ humans living in poverty--it was very specifically meant for those who could not otherwise transact using normal means that could be traced by the authorities.

[Smartprofit]

"Blockchain Remains, and Will Forever be, a Dire Grift, a Perilous Scam and a Nasty Scourge"

John Reed Stark has some, um, opinions...

https://x.com/JohnReedStark/status/1845160201667981566

Bitcoin is definitely not a scam. Bitcoin is an amazing phenomenon, a universal value and a decentralized protocol for transferring value in the virtual space. It is a pity that John Reed Stark did not understand this issue well.

His criticism of Bitcoin is unfounded. Yes, Bitcoin has its flaws, but most of them are not related to its architecture. Bitcoin is constantly subjected to direct aggression from those in power, in particular, they are trying to take away the value of this cryptocurrency through legislative regulation.

Bitcoin derivatives do not correspond to the original concept of the first cryptocurrency (this is a fact). KYC and AML procedures do not correspond to the original concept of the first cryptocurrency (this is a fact). Analytical programs aimed at violating the anonymity and privacy of Bitcoin owners do not correspond to the concept of Bitcoin (this is also a fact).

[d5000]

Many countries have solved this, including much of the poorer countries.

There may be basic bank accounts or M-PESA style payment solutions, but they still have two characteristics:

1) they charge fees to an intermediary,
2) the intermediary, in theory, can chose to not accept you, for whatever reason.

In the EU for example basic bank accounts (those open to almost "everyone") are 2-3 times more expensive than normal bank accounts with requirements regarding credit worthiness. Do you think that's "inclusive"? M-PESA is also relatively expensive because it charges 1-2% per transaction, even if some (very) small transfers are free (those worth less than $1 or so).

Yes, crypto has transaction fees, but they're relevant only for Bitcoin and Ethereum, and L2s exist for both (let's not start this discussion again, haha).

Crypto's main USP anyway is censorship resistance, i.e. point 2. The whole idea is that you shouldn't have to ask anybody if you're allowed to transact values. That's what real financial inclusion means imo.

You can offer 999 products for 999 marginalized groups but there will be most of the time one which doesn't fit the requirements. Crypto solves this "by design". The market may be "tiny", and Bitcoin may also not be "designed" for the poor, but that's not relevant. It's relevant that you know you have always the crypto option for some value transfer issues, even if everything in your life fails, or if you country suddenly turns into a Nazi or Communist dictatorship (not that uncommon, unfortunately).

To solve this particular problem, quite frankly crypto is not only not necessary, it's needlessly complicated.

I don't think it's complicated. There are lots of easy to use apps.

[legiteum]

Many countries have solved this, including much of the poorer countries.

There may be basic bank accounts or M-PESA style payment solutions, but they still have two characteristics:

1) they charge fees to an intermediary,
2) the intermediary, in theory, can chose to not accept you, for whatever reason.

1. Bitcoin can cost up to $40 for a single transaction--there's simply no chance that any viable transaction means has fees even within an order of magnitude of that.

2. I guess "anything is possible", but in practice, are poor people really being refused access to digital payment means that are... made to be used by poor people? I really can't imagine that is a widespread problem.

Yes, crypto has transaction fees, but they're relevant only for Bitcoin and Ethereum, and L2s exist for both (let's not start this discussion again, haha).

L2s aren't blockchain and aren't Bitcoin. I am certainly an advocate for fast, non-blockchain-based currencies that can offer consumers extremely low-cost digital currency at a fraction of a price of a credit card transaction and can scale to millions of transactions per second, able to handle all of the world's daily transactions. But I suspect the author of the article linked in the OP knows about Haypenny . I suspect he was talking about... Bitcoin...