RE: IT'S TIME FOR US IN THE TECH WORLD TO SPEAK OUT ABOUT CRYPTOCURRENCY A response to the short essay written by user Pinboard on Twitter Inc's platform. https://twitter.com/Pinboard/status/1399058952336277505 S1. THE CONTEXT As per the usual bi-daily news.ycombinator.com check, this particular link caught my eye. I decided to give it a day before reading and to digest the writing. My instant impression was: the title insinuates that the technologically-inclined population must fulfill its great duty to protect the innocent from the evil clutches of cryptocurrency, a technology being pushed by the shadows of Wallstreet. Oooof, here we go...Here we go!! First of all, you know how many tech people actually know shit about cryptocurrency?... Second of all, you know many tech people think they know about cryptocurrency, but actually don't know shit about it still?... The following is written by someone who acknowledges there are pros and cons to cryptocurrency at large. I am confident that my knowledge around cryptocurrency is sufficient to express and argue that what Pinboard has written is...dramatic. I want the reader to note also there is no duality to Pinboard's thinking here. All their text is written with no charity toward the other side. It leads to further questions: who is Pinboard? Who do they work for (if anyone)? What is the incentive to be bashful? Are they just lazy to express why? Were they the victim of a plot which used cryptocurrency as a vehicle? Many many questions, and probably no answers. I can answer the questions about myself to be fair: I'm a software developer; I'm self-employed; I will try not be lazy with my response; I have been bitten and burned by cryptocurrency more than once; I am still extremely confident in the techonolgy behind cryptocurrency as a whole, and more so as time moves forward (Cardano was the first real confidence booster, but Ethereum 2 has taken their good ideas and is now almost here 5 years later, truly exciting times coming our way). S2. GENERALLY IS A PYRAMID SCHEME Because Bitcoin especially (through the Tether fraud) and cryptocurrenc- y more generally is a pyramid scheme, of course Wall Street and venture capital need it to go mass market. It's the only road to getting out of their current investment at a profit A pyramid scheme involves money flowing upward toward the founders. In cryptocurrency, external value flows into the system. Is the US dollar a pyramid scheme then? No. Whoever buys cryptocurrency as an investment device is going to be grossly disappointed. I've seen it time and time again: market trickles up, then a short burst of value, the news catches on, friends and family become exicted, maybe one buys in, and then it tanks. This is classical pump-and-dump, which preys on people who have never invested in anything in their life before. This is not inherent to cryptocurrency. The stock market has killed hundreds of people who made terrible decisions. If you are going to invest in cryptocurrency, you invest for the reasons which make it technologically superior to the current system, not the potential value it will give you in 3 months. S3. SUSTAINED BY MIX OF MONEY LAUNDERING, VAPORWARE, FRAUD, RANSOMWARE, GAMBLING I think it's time for us in the tech world to speak out and make it cle- ar the emperor has no clothes here. Cryptocurrency is sustained by a mi- x of money laundering, vaporware, fraud, ransomware, gambling, and delu- sion. It has no social benefit except helping end first dates fast A short comment: I've been seeing that more often lately, "emperor has no clothes here". I'm starting to think there is someone giving talks lately using this phrase often. Nothing useful to the conversation here. Cryptocurrency is also sustained in more positive ways: up until a time it was perfectly fine for cheap transactions; mining provided a nice small alternative source of income; it provides a pseudo-anonymity you just can't have with credit and debit cards; any amount of accounts can be opened at any time of the day; all your transactions can be reviewed; no entity can take your money; multi-signature transactions secure money further; and the biggest one: transactions can have logic. These properties of cryptocurrency give people reason to buy into and transact with it. The people who find value in cryptocurrency are the ones who actually use it. Remember there was a short period when people could buy games off Playstation Network and Steam, and still there are some services offering to purchase items in cryptocurrency. Then there's Decentralized Finance (DeFi). I would say DeFi is the single thing which has and is going to continue to propel cryptocurrency into the lives of regular people. S4. NOT DECENTRALIZED, NOT A CURRENCY, NOT A STORE OF VALUE, NOT PROMISING What we especially need to stress to regulators is that there's no rela- tionship between the technical claims of cryptocurrency and our now ove- r 13 years of experience. It's not decentralized, it's not a currency, it's not a store of value, and it's not a promising technology I want to say before I get philosophical here (you in-the-know readers know exactly what I'm talking about), is that yes, it would be generally agreed that cryptocurrency is not decentralized to a satisfactory degree. Now the philosophical bit: what is decentralization? A lot will say, "a system which is spread out". Others will say, "no central authority". And further some will say "there is no such thing as decentralization if you look hard enough". I agree with all these. Back on topic: the decentralization issue will soon be resolved when systems like proof of stake begin to dominate (hello Ethereum 2 again). China is most likely contains the largest mining pools because they manufacture the ASICs there. Cryptocurrency is a currency, it's in the name, yada yada, people treat it like a stock, I've got nothing more to say here. How Pinboard can say it's not a store of value is dumbfounding. I feel like staring at a wall. How is something where people have literally stored billions of dollars into, not a store of value. Is it because the value within the system fluctuates? Well don't use this system. Pinboard must not have heard of Zimbabwe. The same issue can happen to any currency, or any system you can envision. "Store of value" itself can be a philosophical topic. And to say it's not a promising technology also displays the ignorance they have toward the constant development happening in the ecosystem. Again, DeFi is a huge example here, but also Ethereum 2 (and all the other cryptocurrencies which have experimented with different voting systems). S5. SMART CONTRACTS ARE AN API FOR FRAUD, SELF-FUNDING BUG BOUNTIES AT BEST Cryptocurrency solves no problems that it didn't first create, and most of those it doesn't solve. Smart contracts are neither of those things—- at worst they're an API for fraud, or as @qrs put it, self-funding bug bounties at best This is simulatenously the most entertaining and upsetting comment in the series of posts. For sure it made it me grin, and most likely many other enthusiasts. I listed the problems cryptocurrency solves earlier so I won't repeat myself. A lot of early smart contracts were vulerable to "emptying" simply because the logic of writing such code was very new. Today there have been many improvements towards writing reliable, "unemptyable" contracts. There exists now companies which specialize in auditing these contracts. The entire development system around them and the languages themselves are just continually improving. It's precisely because the bug bounties are self-funded that the improvements have come. "API for fraud" - ok. Just like the API for Win32 is for fraud...Like what? S6. IT'S JUST AN EASY TO LOSE CASINO CHIP I think most of us in the industry gave cryptocurrency a long leash bec- ause it's full of technical cleverness and seemed innovative just on th- ose terms. But it's time we recognize that cleverness is being used as bait to defraud more people and perpetuate a con. Enough is enough The two things people need to know about cryptocurrency are completely non-technical: 1. If it doesn't work, it's just an easy to lose casino chip 2. If it works, it creates an end run around all financial regulation, and will be dominated by uses those regulations try to stop Some of those financial regulations are unjust. People can send remitta- nces in crypto to relatives in repressive countries, and you hear their stories from boosters. But people also want to move billions in untrace- able crime money around. Guess which traffic predominates I don't know what they mean here, "if it doesn't work". The system works fine. The proper way to hold cryptocurrency is to use a dedicated hardware wallet, with the private key written (at the very least) somewhere. It is very hard to lose something you care about like this. Do you just lose your birth certificate every other year? (Concerning if yes.) I'm not sure what they are talking about either about running around regulations: know-your-customer and anti-money laundering is practically required at all exchanges and brokers. There have been reports of this actually working to stop crime money from moving, or stolen money from being sold off. I would say (with no enjoyment) that the current dominated use is probably gambling, only because you can't pay your groceries at Walmart yet. Yes, I include day trading of cryptocurrency (but truly any currency) a part of gambling. S7. REGULATION WILL MAKE IT INDISTINGUISHABLE FROM CURRENT TECHNOLOGIES The third path out of this dilemma is to legitimize cryptocurrency by b- ringing it into our existing regulatory structures, at which point it b- ecomes indistinguishable from technologies that do the same thing at a fraction of the complexity and one millionth of the resource cost. Pinboard must have future-sight then, as they are claiming they can foretell the exact regulations we will be under. I guess those regulations include: * No cryptographic signatures allowed * No private/public keys allowed * No fair cross-border transactions allowed * No transactional logic allowed * No source code allowed These are inherent to cryptocurrency. So sure, you can regulate away these features of cryptocurrency: you'll end up just banning the whole system all together and have nothing but the current technologies; not that they will be indistinguishable. S8. PLAYBOOK Remember the playbook that Uber used 1. Promise a revolutionary technology ("self-driving cars are coming"!) 2. Use that promise as a pretext to ignore all regulation 3. Make a fortune 4. Drop the tech story Same goes for crypto LOL. Ooooh that tricky Satoshi! What a fortune they have made and are spending!! On a more concrete note, even look at Vitalik Buterin: they just donated something like a billion dollars to fund the India COVID aid, one of the largest donations in history. There seems to be a pattern here: it's almost as if the people creating (actually useful) cryptocurrencies have some sort of moral goals! S9. ADDRESS THE ROOT REASON WHY CRYPTOCURRENCY EXISTS We also have to address the root reason that cryptocurrency exists, whi- ch is that there is a corrupt, overfinancialized casino economy that fa- vors the rich, 2008 proved that the system is rigged so they can never lose, and ordinary people will continue to search for a fairer deal A lot of young, idealistic people are getting caught up in cryptocurren- cy because they want to build a better world. Their talent and optimism deserve a better outlet than this scam money, and we all need a better alternative than the status quo A lot of intelligent observers look at cryptocurrency, see that it make- s no sense, and reasonably infer that they must be missing something pr- ofound on the technical level. Tech culture has a nice tradition of not deriding new ideas, but we need to break it here and speak out I think a lot of intelligent observers don't understand cryptocurrency because there are many, many new concepts which need to be understood all at once to make sense of it. I would say what helped me the most was understanding the intersection of game theory, cryptography, and proof of work. That's just the technical side those. Those concepts and technologies have social and functional applications I mentioned above. Cryptocurrency exists because an individual with certain interests and values created a system they believed could be better. There is nothing more to it. This is why I think it appeals to a lot of idealistic young people. Do you think the majority of early adopters were "young" people though? I don't. From what I've read it was mostly 30-50 year olds playing with something interesting. S10. FROM THE OUTSIDE From the outside (like from Congress's point of view) people see a tril- lion-dollar new tech industry, a lot of proponents who of course argue this is the next big thing, and some critics. They don't see the huge s- ilent majority of tech people who know it's a scam. That's on us Without a doubt though it is a new industry? I agree that I'm not a fan of those saying "the next big thing", but for sure cryptocurrency is going to have a considerable impact on our world, if it already hasn't. Lastly, I think the huge silent majority of tech people just don't know enough to say anything useful. I can't blame them, they're a smart bunch! I'd want to know enough too before starting to have confidence to say something. S11. CONCLUSION After about 2 hours of writing, I think I've pretty much said what needs to be said. A lot of points can be expanded on either side, but I hope it's enough to better inform people. ☺ Here's another example of cryptocurrency being useful: I can tell people who enjoyed this they can send money to bc1qeqc0rt4476ffuet6cl6r3a4ft5wts6ra0jhh7f, and they can do so, from anywhere in the world, at any time of the day, from any device, using software of their choice, and any amount they wish, with no restrictions applied. Freedom: it's value of cryptocurrency.