By now, we've all heard people say that after 13 years, there is still no real use case for crypto.
This is a solid rebuttal.
It's a good list - and still fairly unimpressive to me given the level of hype around these technologies. The "other uses" listed here are niche to the point of being irrelevant next to the primary way blockchain tech is currently being used: speculation. Crypto-enthusiasts love to talk about all the world-changing things blockchain will do because it makes them feel like they are participating in a "movement" instead of just another get-rich-quick scheme.
The author hints at the right question to ask at the end of the article. Are the costs to society outweighed by the benefits of blockchain tech? So far the answer to that question is a resounding "NO".
I found the list to be rather esoteric and unimpressive as well. Your comment about get-rich-quick crypto enthusiasts deluding themselves into participating in a movement may be true for a portion of folks, but ultimately is hyperbolic and reductive.
By what measure are you figuring that blockchain technology is costing society more than it benefits it?
Here are some of the real world use cases for blockchain technology that I find most compelling:
The measure I'm using is simple: colossal, nation-state level energy consumption, and gargantuan production of e-waste. When I think of what scientists could do with the amount of computing power spent solving useless equations to "mine" crypto-currency it makes me physically ill. Proof-of-work is a magnificently wasteful solution to the problem.
On the benefits side, blockchain is a cool technology with a many potential uses. Outside of cryptocurrency and the even more ludicrous NFT economy, those potential uses have yet to manifest in any significant way. I'm not saying they won't at some point, but they haven't yet. Because of that, the equation so far approaches 100% cost for negligible benefit.
I don't have the data on the impact of POW mining so I'm not going to argue with you on that but I do believe it's a bit more complicated.
In my opinion, the argument of environmental damage is incredibly weak when used against the entire cryptocurrency industry. Many are already using negligible amounts of energy and Ethereum is switching to POS as well.
Maybe Bitcoin, but you can't say that about crypto in general.
If energy usage is actually your concern, you should see how much energy is wasted by our current legacy banking system! BTC uses a fraction of the energy per transaction in comparison.
I'm still not seeing any explanation that shows how blockchain technology is a net negative for society. Your position doesn't take into account Proof-of-Stake vs Proof-of-Work, or the fact that the majority of Bitcoin runs on renewable energy.
I really hope you're at least consistent with your view, and that you also decry the video game industry and streaming platforms with the same conviction.
Do you also get physically ill thinking of all the potential scientific computational breakthroughs that are being inhibited by the endless cascade of useless media being absorbed by the population every day?
A common, but incredibly weak rebuttal to the "crypto uses too much energy" argument is "but fiat uses energy too".
I think it's important to remember that these shouldn't be compared 1:1. Crypto is not just another type of money — it's supposed to be the solution to the problems of fiat. Therefore, Crypto carries the burden of proving that it is better than fiat. It can't just be equally bad.
My rebuttal was not "but fiat uses energy too". My rebuttal was "fiat uses far MORE energy than Bitcoin".
Nobody is comparing them 1:1. I think crypto has proven that it has the potential to be far better than fiat.
I think crypto has long since proven its value in the world. But just as with any emerging technology, it's gonna take time to find its groove.
I'm looking for data on that right now and here's the issue I have with what I'm seeing: Each article I've read compares the energy consumption of the entire banking industry with one cryptocurrency. Banks are still processing significantly more transactions than BTC, and they also have a million other functions that BTC does not perform. So it's not surprising that the energy consumption numbers look to be in BTC's favor. Am I missing something here?
Your initial position was that crypto carries a burden of proof to show how it's better than fiat. My rebuttal included reasons why I believe it is arguably better than fiat.
Now it seems like the argument has shifted...
You're missing my point. I'm not saying that blockchain is a fundamentally problematic technology. I've been following this stuff with interest since the beginning and I can see a lot of cool potential. My point is that right now every use of blockchain tech outside of crypto-currency and bored apes is niche to the point of being irrelevant.
Yes, there are alternatives to proof of work, but right now the vast majority of cryptocurrency volume is still running on a proof of work system.
Energy used is energy used. If you build your crypto-mining operation next to a geothermal plant and buy all your electricity from them, you're still using power that could have otherwise gone to another use. That's an oversimplification, and this point alone deserves an essay-length response, but the TL;DR is that claiming that "Bitcoin isn't wasteful because it runs on renewable energy" is completely bogus. And that's without even touching the manufacture, transport and assembly of the processors powering that mining operation.
Television shows and video games provide people with happiness. That's a tangible value-add for society.
I hear you. I don't think I'm missing your point. I just disagree.
Cardano (proof-of-stake) is doing some amazing things with Africa. They just signed the biggest blockchain contract in history to revolutionize finance, educational records, and asset ownership for a continent that largely has not had any meaningful access to these systems.
VeChain (proof-of-authority) aims to solve major supply chain and authenication issues for corporations like McDonald's, Louis Vitton, BMW, etc. These are hardly irrelevant niche cases when being utilized by some of the largest brands on Earth.
Nobody said "Bitcoin isn't wasteful because it runs on renewable energy". That's a strawman that I never posited. I was contrasting the energy usage of Bitcoin vs our current financial system, as well as how it compares to the gaming and streaming industry that nobody seems to ever consider when making this particular argument against crypto.
Do you know that crypto has been the primary source of wealth creation for millennials? Do you know how much joy it would bring someone to become a millionaire or billionaire thru crypto investing, as has been the case for tens of thousands of individuals? Why is happiness a justifiable reason for all the energy usage of games and entertainment, but not when it comes to the energy usage of crypto?
For sure! Defi has potential in helping developing countries leap-frog existing legacy infrastructure. I do think there's some cool stuff happening there. I don't know anything about VeChain, but I'll look into it.
I'd still point out that all the projects you're talking about are very much unproven and in-progress. Which is exactly my point. There's cool stuff that people are working on in defi and blockchain. But they just aren't here quite yet. What is here, if you're really being honest about it, are a set of alternative investment vehicles dominated by the same shitty wall street bros that dominate every other tulip craze and ponzi scheme. I don't blame the nerds who invented this stuff. I blame the Wharton dudes who fucked it up. It's all about greed right now.
Apologies if I put words in your mouth. Communicating online is hard (now if blockchain could solve that problem...). I'm especially sensitive about the renewable energy side because it's a particular interest of mine (it's what my college degree is about), and the claims about renewable energy in the crypto-mining industry are pretty classic greenwashing for the most part.
I guess what I'm really saying is that I think Bitcoin, and to a lesser extent Ethereum, currently suck. And those two things are bigger than every other blockchain project combined.
I think Bitcoin is revolutionary and has set ideas and technologies in motion that will have a major impact on the world. Bitcoin proof of work is inefficient, but so was moving money around with a horse and buggy back in the day. Eventually things improve and become more efficient, and that's when it gets really exciting to me. I would never say that Bitcoin and crypto doesn't have major issues, I just like to engage in these big ideas, especially with folks who don't see them as I do.
Anyway, thanks for the respectful dialogue. Cheers!
That's a great point and the most of the examples cited, including money, suffer from the same issue: lack of central authority removes protections that society weighs heavily. Untold millions have already been lost to fraud and simple human error that central control would have prevent, even though that has a cost.
Wrong crowd. IHers will jump on it when it's more mature and these use cases have proven themselves. Which is ironic, really, because many are trying to build startups.
I find it baffling that any developer can question the utility of blockchain or tokenisation through cryptocurrency (if they have bothered to spend time looking at it from a technical perspective).
Interesting. I thought the author did a good job of refuting the argument without doing the whole crypto-is-the-answer-to-everything thing.
IMO the argument that "Blockchain as an escrow which no one has control over" is flawed because at the end of the day any given technology interfaces with humans in some form or the other. And it is that point where people who want to control will control. A lot of motivation to have such a system comes from the fact that people have borne the brunt of existing systems. But it is my personal view that we cannot solve political and structural problems with technology.
Also, as a technical person myself, I do see the usecase for money, BUT not at retail level. Having interacted with banks as I was involved in building payment systems, I realised the real application lies as a "Backend of bank" rather than retail level P2P which is fairly efficient already.
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There are two use cases that actually interest me:
1. NFTs as digital goods, and the blockchain as a universal API.
I don't care one bit about the speculative art market NFTs have been fueling. But I love the idea of digital (as opposed to physical) goods. For goods to be useful, they need to be portable and universally visible. In the real world, I can take my physical goods with me anywhere. But online, digital goods live in silo'd databases owned by individual web services, and can only be accessed through proprietary APIs you have to learn. Thus they aren't very useful, thus they aren't widely used or created.
If every service stored its information in a universal database owned by their customers, then we could have digital goods. But no such database has ever caught on and gotten widespread adoption, until the blockchain. (Which isn't really a database, more of a ledger, but it can easily store pointers to information, which is good enough.)
If services start storing goods in their customers' wallets, it'll be easy for any website to see the "goods" that their users have, meaning the goods follow you around the web. For example, that could help me fight spam on IH if I could automatically trust new accounts from users who own NFTs representing being verified on Twitter, or a YC founder, etc.
2. Social tokens as trade-able "Disney dollars" for communities and influencers.
I wish anyone and anything could "IPO" and you could invest in it, and tokens make that possible to some degree. For example, if IH had its own token, and you as an IHer believed in the platform and thought it could grow, you could buy the token as a way of investing in it. Doing so would provide more funding to the site, helping it grow, just as buying stock helps companies grow. And the token could appreciate with more buyers, allowing early investors to make a profit.
In addition, since it's a digital crypto token, it could function as more than just a unit of equity, but also a unit if exchange, similar to Disney dollars at Disney World. For example, I could sell special powers and privileges (e.g. podcast ads) or goods (e.g. IH merch) for tokens. So there's more reason to buy them than just speculation.''
The upside is creating a world where not just the elite and connected angel investors and VCs can get into things early, but everyday people can too. The downside, of course, is this incentivizes scammers to create hype around crappy projects. Perhaps I lack empathy, but I prefer a world where we're a relatively more lax around giving more people the opportunity to invest, even if it means some will invest poorly.
That article pretty much explained why there's no real use case (besides bitcoin, because it has a special place).
If we are all hardcore engineers, given time is infinite, the optimal solution would be chosen. But we live in a society, of people, of politics, of opinions, that sometimes the proliferation of technology is a way for us to move forward.
An argument I often hear is, "But when the internet first came out the first few use cases weren't understood by the mainstream well, blah blah"
But truthfully, by the time the dot-com crash in 2000 (around 7 years after it became accessible publicly), there were quite a few obvious use cases for normal people. Crypto has now been around 14 years and there are still so many speculative use cases but, for the average person I think crypto still seems almost...irrelevant.
👍 Well i'm officially going from the "no use case" camp to the "some use cases, but still not sure if it's a good thing" camp.
I think crypto will prevail over fiat in the long run. The thing is, "long run" can be 3 years. It can be 30 as well.
Crypto is fiat. The "king" is the central authorities that control that cryptocurrency. For example the BTC/BCH split proves that code is not law, it is a political body who decide what BTC actually is.
ETH is worse, with hard-coded transaction amendments by the core team (re: The DAO). I think VB can print as many as he likes in the future too.
And the shitcoins, which is everything else probably, are centralized with validators, centralized with who controls number of tokens, or are backed by something you have to trust them backing it with.
Gold is a non-fiat currency, because it is physically impossible to produce from other elements (you need early-universe conditions). Although it can be discovered so the supply can increase rapidly.
Yes, I do this all the time. And I am not at all afraid of the moment that now it has collapsed. I know for sure that as he fell, so he will rise. There may not even be any other options. On the contrary, many people are now hastily trying to abandon their investments, but I know that I will win on this very difference, and everything will definitely be fine with me. So I suggest that you also buy boldly cryptocurrency https://utorg.pro/buy-xrp-with-usd/ right now. And everything will be fine, you'll see.
Interesting argument. I have to say though that it's not the most compelling argument. OK ... so its use case is "decentralization" and "to cut out middlemen, break up monopolies, and fight aggregators."
That would be powerful if crypto were doing that. However, it isn't. It's a faulty assumption to think that because crypto could do these things that it ultimately will. Keep in mind that once it becomes more mainstream, it'll still be highly concentrated among the richest people.
Perhaps someday it'll be more widely used but it won't be the world-changing opportunity that people claim.
I think people from first world countries are unaware of how much crypto is a game changer for second and third world countries. It isn't just "another payment method". To us, it is the best (and possible the only) payment method that we can use to pay and receive payments from people/companies world wide.
I'd feel a lot safer to send/receive/invest money using crypto, than with any other bank in my country
The problem is these cases are solved better with conventional tech. You can solve them without blockchain in ways that give you great privacy protections, if you wish. For example Proton mail.
If it needs to be decentralized, there are decentralized protocols like Bittorrent, Tor and IPFS that don't rely on blockchain as far as I know.
For file hosting, just use S3, or one of it's many competitors. It is such a non-issue at small scales (and is free or super cheap). At large scales you are going to need professionally managed hosting services, like AWS, or similar to deal with it and give good performance.
The blockchain alternatives are usually one or more of slow, expensive, actually centralized (so what is the point?).
I'm realising over time that rationally speaking it's a lot harder than people make out to be justified in being fully pro or fully anti crypto.
I don't think really it makes any point at all. Certainly not one that's going to sway any crypto skeptics:
Crypto is successful at being money. If you don't believe me, then I'm happy to sell you the laptop I'm writing this on for 1,000 ETH instead of 1,000 USD.
Crypto is successful at being money. If you don't believe me, then I'm happy to sell you the laptop I'm writing this on for 1,000 ETH instead of 1,000 USD.
Cool, how about 1,000 SHIB then?
If I had to choose I would opt for 1,000 BTC ;-) which, IMO, is the only sound crypto monetary asset. ETH isn't driven by the same fundamental principles. Case developed on: https://www.callmefred.com/is-it-the-end-of-bitcoin/