It was supposed to be a financial revolution. Instead, crypto has become an environmentally disastrous gift to con artists, says academic David A Banks
The crux for all of those points is that the value is affected by fiat investments. It may not be able to be manipulated by a central bank, but it is influenced by the amount of investment put into it, which gives it the dangerous edge of being a very convenient ponzi-scheme, not to mention an incredibly unstable form of currency that most of the proletariat can’t afford to risk using for their day to day expenses. That alone turns it from “currency” to “high risk investment.”
Being able to send it instantly without fees is a great dream, but the above points kind of spoil the intent.
We don’t need to get into the environmental aspects, or the sinful impact it’s had on the price of GPU’s (further pushing the proletariat from being able to fully participate in the blockchain), and the equally terrible chip shortage combined with the continued purchase and use of GPUs by crypto miners.
But blockchain cryptocurrencies have several serious problems beyond any technical oversights with the actual implentation.
arguably, your biggest stake holders now are the incredibly wealthy -> those who can afford to mine (therefore, those who can actually participate in the blockchain), and/or those who have invested the most fiat into the currency.
I know what the original goals of crypto were, but the unfortunate reality is that as soon as fiat got into the mix, the dream died. Capitalism strikes again, and no one with real money being made is going to change the way it works now.
If there’s a crypto out there that isn’t available for fiat investment, that’s the best hope to actually having a decentralized currency for all people
it is influenced by the amount of investment put into it
All currencies have this problem. Bigger ones suffer less from it, so you might not notice it. In fact it’s even worse than you say.
Whales actively manipulate the price for profit. It’s not a ponzi scheme. You’re confusing two different things. If you want a buzzword it’s a pump and dump.
This doesn’t affect only currencies but any commodity. Look at oil or food or land or gold. All have exactly the same problem you cite for bitcoin. In fact gold is a very good analogy for bitcoin. You can understand it better by thinking of it as “digital gold”.
We don’t need to get into the environmental aspects
Thanks. That’s a tired auld one.
your biggest stake holders now are the incredibly wealthy
I’ve thought about this a bit. Right now, I don’t think the currency itself can or should solve this. The only working solution is redistributing wealth through the tax system. It works very well when done properly. So profits from bitcoin should be taxed like any currency trade. Income in bitcoin should be normally. Inheritance tax, and all the rest, should all be agnostic to which currency you use. This is the only proven way.
If there’s a crypto out there that isn’t available for fiat investment
That’s a very good idea. How would it work? Have you seen been anything written about this already?
For ponzi-schemes, you have to look at the crypto industry’s lesser known feature: Tokens
Long before NFT’s, companies have been manufacturing systems to create “tokens” (usually utility tokens) and trying to sell them to other people. This usually happens through crypto conferences, crypto meetups etc. Typically, the plan is to convince people of their impending value growth by going on a long complicated sounded explanation of how tokens are earned and how many people are buying into them, and then get that person to by a bunch of cheap tokens. The promise is that they can then sell them to others to make more money, or (in quite a few cases), sell tokens to someone who will sell tokens and give the initial seller a small percent… and so on.
Bitcoin did not start with fiat-investment opportunities, but with the way the entire crypto market is operating, that’s the goal now: creating investment opportunities. It’s proven to be a very effective means of making fast-money, so there’s no incentive for the market to move away from pushing crypto as an investment hole rather than focusing on value control and stability to make it a more accessible form of currency.
It also makes me wonder about how functional a lot of these coins even are in terms of utility. How many stores will accept every single kind of crypto?
And nobody wants to talk environment… but it’s a really huge point to bring up, especially now that the environment is worse than ever. I’ve really dug into the impacts on other posts, but I try to at least mention it because this is the one big aspect outside of the “currency” itself that actually impacts people who choose not to participate. The GPU shortages, the giant mining farms, growth-driven-proof-of-concept-difficulty-increases, etc.
I get it, they’re working on something better than proof of work in terms of energy consumption. But look at how many of the damn things exist! And since all crypto currencies work alongside fiat, it’s not like we’re replacing traditional banking.
Sure, the energy consumption and carbon dioxide output is roughly ~50% of traditional banks, but unless everyone suddenly decides that they don’t care about their fiat investments, that output is just going to grow alongside traditional banks
It’s not a Ponzi exactly, it’s called a pump-and-dump. But yes it’s very common and very bad.
I agree that crypto currencies seem to be used much more for cynical investment profiteering, and much less for commerce, that fiat currencies. Probably because they are new. Investors are much faster at exploiting any new thing.
Bitcoin has not failed yet. It might become like company shares, an ostensibly useful thing that in practice is just a money-making game for professional gamblers. Or it might find a real large-scale use in the economy. It depends on so many factors.
The environmental issue really deserves its own discussion. There are several valid ways of looking at it. For example:
Bitcoin’s model was simple and robust and successful. But bitcoin’s value increased too much, too fast, making mining very profitable. It’s a victim of its own success.
It’s easily fixed, for example by borrowing Monero’s proof-of-work algorithm. But the bitcoin devs need to be given an incentive to change it.
This is capitalism - everything gets exploited for profit until it is devastated. It’s not a bitcoin issue it’s sick-society issue.
I personally believe that the GPU and electricity crises are being driven by datacentres (collecting human behaviour data) and AI (finding ways to exploit that data for profit and power) but bitcoin is being used as a scapegoat.
And anyway the solution is not just “ban the bad things”. There are effective ways to disincentivise people from exploiting electricity.
I thought this forum is about technology, and not religion.
and no one with real money being made is going to change the way it works now.
Of course, no one is going to change the way an existing currency works, that would cause major trouble. If you want a different type of cryptocurrency, it should start as a new project.
I thought this forum is about technology, and not religion.
Cryptocurrencies etc are religion at this stage, debating cryptobros is eerily similar to debating religious fanatics. You get a recital of the “truths of faith”, and any scratching off the surface and pointing out how they are demonstrably untrue gets people angry and start calling you names.
Plenty of threads here over the last few weeks that prove it.
I have no desire to start any new crypto currency. I’ve worked development in that business for long enough to have completely lost the taste for it.
Most coins are poorly planned and run by con men. It’s no surprise that things are slowing down
I thought this forum is about technology, and not religion.
Just noticed this. Didn’t think exaggeration or metaphor was beyond the scope of people’s comprehension?
If we are talking about most coins, then its definitely true that they are poorly run. But surely you can agree that there are at least a handful of technologically interesting crypto projects. For example Sia
And what exactly do you consider as “sinful impact”? Everything that you personally consider “bad” for some reason?
See above. The comparison was to what the crypto boom has done to GPU prices.
Sia seems mildly interesting, but I don’t see what purpose it fulfills that self hosting does not. It introduces several complications to what should be a fairly straightforward process, and keeping your files on the Sia blockchain would really limit what you are able to do with them without introducing even more complicated steps. Like if you wanted a hosting solution that could act as a database, or a simple webserver.
It seems like just another way to get people to buy into a specific crypto currency.
Get rid of the crypto currencies, and use the blockchain for more reasonable things. At least in Canada, there would be merit in having every hospital acting as a node on their own private blockchain so they could share patient information. Make sure that if someone is hospitalized outside of their usual location, they aren’t given something that they’re allergic to.
Blockchains are largely just privatized, highly redundant networks for data exchange and tracking. I think what people outside of investors seem to be truly drawn to is that idea of privacy and data ownership.
Fediverse and self-hosting align closer to these ideals
environmental impacts are largely:
Carbon dioxide output, resources required to accommodate expanding blockchain, increase in proof-of-work requiring even greater resources and even higher carbon output, greater strain on gpu demands etc.
then take those reasons and consider ever single crypto with these issues
all in all, you could say that those things are all bad
you speak to your audience. I’m assuming that a majority of people here do not represent the interests of GPU manufacturers…
or we can assume everything is subjective and therefore does not matter one bit in the grand scheme of things
The crux for all of those points is that the value is affected by fiat investments. It may not be able to be manipulated by a central bank, but it is influenced by the amount of investment put into it, which gives it the dangerous edge of being a very convenient ponzi-scheme, not to mention an incredibly unstable form of currency that most of the proletariat can’t afford to risk using for their day to day expenses. That alone turns it from “currency” to “high risk investment.”
Being able to send it instantly without fees is a great dream, but the above points kind of spoil the intent.
We don’t need to get into the environmental aspects, or the sinful impact it’s had on the price of GPU’s (further pushing the proletariat from being able to fully participate in the blockchain), and the equally terrible chip shortage combined with the continued purchase and use of GPUs by crypto miners.
But blockchain cryptocurrencies have several serious problems beyond any technical oversights with the actual implentation.
arguably, your biggest stake holders now are the incredibly wealthy -> those who can afford to mine (therefore, those who can actually participate in the blockchain), and/or those who have invested the most fiat into the currency. I know what the original goals of crypto were, but the unfortunate reality is that as soon as fiat got into the mix, the dream died. Capitalism strikes again, and no one with real money being made is going to change the way it works now.
If there’s a crypto out there that isn’t available for fiat investment, that’s the best hope to actually having a decentralized currency for all people
All currencies have this problem. Bigger ones suffer less from it, so you might not notice it. In fact it’s even worse than you say.
Thanks. That’s a tired auld one.
I’ve thought about this a bit. Right now, I don’t think the currency itself can or should solve this. The only working solution is redistributing wealth through the tax system. It works very well when done properly. So profits from bitcoin should be taxed like any currency trade. Income in bitcoin should be normally. Inheritance tax, and all the rest, should all be agnostic to which currency you use. This is the only proven way.
That’s a very good idea. How would it work? Have you seen been anything written about this already?
For ponzi-schemes, you have to look at the crypto industry’s lesser known feature: Tokens
Long before NFT’s, companies have been manufacturing systems to create “tokens” (usually utility tokens) and trying to sell them to other people. This usually happens through crypto conferences, crypto meetups etc. Typically, the plan is to convince people of their impending value growth by going on a long complicated sounded explanation of how tokens are earned and how many people are buying into them, and then get that person to by a bunch of cheap tokens. The promise is that they can then sell them to others to make more money, or (in quite a few cases), sell tokens to someone who will sell tokens and give the initial seller a small percent… and so on.
Bitcoin did not start with fiat-investment opportunities, but with the way the entire crypto market is operating, that’s the goal now: creating investment opportunities. It’s proven to be a very effective means of making fast-money, so there’s no incentive for the market to move away from pushing crypto as an investment hole rather than focusing on value control and stability to make it a more accessible form of currency. It also makes me wonder about how functional a lot of these coins even are in terms of utility. How many stores will accept every single kind of crypto?
And nobody wants to talk environment… but it’s a really huge point to bring up, especially now that the environment is worse than ever. I’ve really dug into the impacts on other posts, but I try to at least mention it because this is the one big aspect outside of the “currency” itself that actually impacts people who choose not to participate. The GPU shortages, the giant mining farms, growth-driven-proof-of-concept-difficulty-increases, etc. I get it, they’re working on something better than proof of work in terms of energy consumption. But look at how many of the damn things exist! And since all crypto currencies work alongside fiat, it’s not like we’re replacing traditional banking.
Sure, the energy consumption and carbon dioxide output is roughly ~50% of traditional banks, but unless everyone suddenly decides that they don’t care about their fiat investments, that output is just going to grow alongside traditional banks
It’s not a Ponzi exactly, it’s called a pump-and-dump. But yes it’s very common and very bad.
I agree that crypto currencies seem to be used much more for cynical investment profiteering, and much less for commerce, that fiat currencies. Probably because they are new. Investors are much faster at exploiting any new thing.
Bitcoin has not failed yet. It might become like company shares, an ostensibly useful thing that in practice is just a money-making game for professional gamblers. Or it might find a real large-scale use in the economy. It depends on so many factors.
The environmental issue really deserves its own discussion. There are several valid ways of looking at it. For example:
Bitcoin’s model was simple and robust and successful. But bitcoin’s value increased too much, too fast, making mining very profitable. It’s a victim of its own success.
It’s easily fixed, for example by borrowing Monero’s proof-of-work algorithm. But the bitcoin devs need to be given an incentive to change it.
This is capitalism - everything gets exploited for profit until it is devastated. It’s not a bitcoin issue it’s sick-society issue.
I personally believe that the GPU and electricity crises are being driven by datacentres (collecting human behaviour data) and AI (finding ways to exploit that data for profit and power) but bitcoin is being used as a scapegoat.
And anyway the solution is not just “ban the bad things”. There are effective ways to disincentivise people from exploiting electricity.
I thought this forum is about technology, and not religion.
Of course, no one is going to change the way an existing currency works, that would cause major trouble. If you want a different type of cryptocurrency, it should start as a new project.
Cryptocurrencies etc are religion at this stage, debating cryptobros is eerily similar to debating religious fanatics. You get a recital of the “truths of faith”, and any scratching off the surface and pointing out how they are demonstrably untrue gets people angry and start calling you names.
Plenty of threads here over the last few weeks that prove it.
I have no desire to start any new crypto currency. I’ve worked development in that business for long enough to have completely lost the taste for it. Most coins are poorly planned and run by con men. It’s no surprise that things are slowing down
Just noticed this. Didn’t think exaggeration or metaphor was beyond the scope of people’s comprehension?
If we are talking about most coins, then its definitely true that they are poorly run. But surely you can agree that there are at least a handful of technologically interesting crypto projects. For example Sia
And what exactly do you consider as “sinful impact”? Everything that you personally consider “bad” for some reason?
See above. The comparison was to what the crypto boom has done to GPU prices.
Sia seems mildly interesting, but I don’t see what purpose it fulfills that self hosting does not. It introduces several complications to what should be a fairly straightforward process, and keeping your files on the Sia blockchain would really limit what you are able to do with them without introducing even more complicated steps. Like if you wanted a hosting solution that could act as a database, or a simple webserver. It seems like just another way to get people to buy into a specific crypto currency.
Get rid of the crypto currencies, and use the blockchain for more reasonable things. At least in Canada, there would be merit in having every hospital acting as a node on their own private blockchain so they could share patient information. Make sure that if someone is hospitalized outside of their usual location, they aren’t given something that they’re allergic to. Blockchains are largely just privatized, highly redundant networks for data exchange and tracking. I think what people outside of investors seem to be truly drawn to is that idea of privacy and data ownership. Fediverse and self-hosting align closer to these ideals
you have to be delusional to not objectively assess the state of gpu prices and the environmental impacts as “bad”
https://priceonomics.com/how-has-cryptocurrency-mining-influenced-gpu-prices/ here’s an interesting bit on the prices
environmental impacts are largely: Carbon dioxide output, resources required to accommodate expanding blockchain, increase in proof-of-work requiring even greater resources and even higher carbon output, greater strain on gpu demands etc. then take those reasons and consider ever single crypto with these issues
all in all, you could say that those things are all bad
I think the label “bad” is very clearly subjective. For example, gpu manufacturers clearly benefit from this.
you speak to your audience. I’m assuming that a majority of people here do not represent the interests of GPU manufacturers… or we can assume everything is subjective and therefore does not matter one bit in the grand scheme of things