I ask this as an honest question: is there any cryptocurrency scheme that isn’t a scam?
At this point I don’t know of any that are not scams, if only based on the economic fundamentals or energy use or both.Some may argue that Monero or others like it are…okay-ish, but you’re still consorting with money launderers, tax evaders and the black market and it’s still a speculative ETF asset.
Everything else that includes a deflationary asset model – particularly proof of work chains – is effectively a Ponzi bag holding scheme with extra steps.The relationship between Bitcoin and Tether in particular is totally insane and is basically under fully centralized capture and price pumping due to how Tether just prints billions of fake Tether dollars that are supposed to be pegged 1 to 1 with the US dollar.
Proof of Stake systems are often held up as solutions to the problems of Proof of Work systems, but everything I’ve read about PoS chains is that it’s just PoW with less steps because you can just buy your way into more control or value of PoS systems.
I mean it’s right there in the name, Proof of Stake.
That being said there are end uses cases for a blockchain as an immutable public ledger but without a mining reward basically no one wants to spend their electricity and computer cycles to maintain it for free.And if no one wants is incentivized to maintain it it’s not going to be secure and will be even more vulnerable to attack across multiple surfaces, including just taking over the whole network, and it loses all benefits of being decentralized.
Most if not all of the problems that a blockchain could solve are also easily solved with a centralized database held and verified by multiple trusted parties and public accountability.Like you could pretty much solve most of the problems that blockchains could, in theory, solve just by using a spreadsheet and repository checks with something like Github where there’s change logs, checksums and a public record of changes and public mirrors of those databases.
Shoot you can do more secure transactions per day
One of the really scary things – out of many – of this whole insanity around ETFs and blockchains is that a whole lot of people – particularly millenials and younger – that are investing real world money in all of this as a retirement fund and as a hedge against inflation.
Considering how badly they’re getting screwed with modern economics and debt culture I can’t say I blame them.
But a lot of people involved in this aren’t considering the many endless ways this all goes wrong.
There’s no guaranteed reason why the main Bitcoin blockchain will continue to gain value even with more and more adoption.
At some point the difficulty in solving the cryptographic puzzles becomes economically or technologically unviable, and almost anyone can just copy-paste the code and force a hard or soft fork of the chain.
Which has already happened a bunch of times, notably in the BTC vs BCH (Bitcoin vs Bitcoin Cash) hard fork and split where BTC has been co-opted by centralized vested parties who didn’t want to increase the block size to reduce mining difficulty and speed up transaction rates and they have a vested interest in keeping block sizes low, difficulty high and mining fees high, and instead tried to fundamentally alter Bitcoin from the original Satoshi white paper specs by bolting on layers of services like Segwit and Lightning Networks, which are basically extra steps and channels designed to try to have their cake of high fees and small blocks while increasing transaction rates and reducing transaction costs at the same time, and this has failed spectacularly and now the going mantra isn’t that Bitcoin was ever meant to be digital cash to be spent but now it’s digital gold that’s supposed to be a stable store of value.
Which it’s not.
Another big picture problem in all of this is that – by design – the structure of Bitcoin and most of it’s related forks or related technology means that it’s not physically possible to mine all of the (in Bitcoin’s case) artificial cap of 21 million whole coins without facing the problem that you’ll run out of energy and atoms in the known universe before you can mine them all due to the difficulty scaling as the blockchain progresses, and we’re already seeing network effects of these limitation.
Like this point gets totally glossed over and missed by almost every cryptocoin enthusiast I’ve ever met and this point sails right over their head that, no, you don’t get to keep solving exponentially increasing difficulty cryptopuzzles without exponentially increasing power consumption and computing cycles and – by design – there’s no solution to this or end game that doesn’t violate the laws of thermodynamics.
Related to this is the looming threat to these blockchains through quantum computing and cryptography, which will make most of these technologies useless through making solving the prime number crypto puzzles trivially easy instead of difficult, which will likely make the perceived value of these systems crash and plummet to zero because now they’re no longer secure in the way that they were secure with traditional plain old silicon digital computing.
Worse, the perceived value of cryptocoins is probably accelerating research and funding of quantum computing, and the side effect of this is it’s going to break cryptography and privacy as we know it today.
Everything about this is awful.It’s not a solution to our modern economic woes.It’s not going to liberate the masses.It’s just more of the same economic abuse and bullshit except now it’s weaponized, de-centralized and difficult to regulate.
And the longer this all goes on the worse it’s going to get on a global economic scale.
Right now it’s already bad enough that despite the artificially inflated market caps and “paper” value of all of these networks if all of the known ETFs crashed to zero it would probably be a global economic crisis on levels we have never scene before, especially since it’s mainly going to be all of the little people and bagholders that are going to watch their savings evaporate into nothing more than wasted heat and electrons and they’re not going to get bailed out.
The whales and centralized exchanges aren’t storing their value in ETFs.They extract the gains they make and convert it to fiat, or owning property or other traditional systems.They mainly hold huge quantities of coin to manipulate market movements for pump and dumps because there’s basically no regulation against moving the markets like that, and even if it was regulated it would be hard to enforce without completely breaking cryptography or owning more than 51% of a given Bitcoin-type proof of work network.
What’s really wild to me is I’ve been following Bitcoin basically since the very start, like 2008, back when I was still drinking a lot of tech libertarian koolaid and being very excited by it, because the whole concept is really seductive and is just obfuscated enough to hide the fact that it does the thing that deflationary currencies and/or Ponzi schemes do.
And I remember trying to explain it to someone really early on, maybe someone non-techy.It might have even been my very non-techy Grandma, but that timeline doesn’t quite line up so maybe I saw something about earlier concepts of cryptocurrencies or some earlier similar electronic cash tech or maybe I was talking like a cryptobro to someone else.
Whomever it was, I clearly remember them asking questions that I thought were ridiculous at the time but in hindsight they were clearly very astute because they basically called it out as a Ponzi scheme and maybe even made a reference to the Dutch Tulip craze.
(Which was, historically speaking, less crazy than most people think it is.).