TL;DR: Use this thread to share the most well-spoken critics of crypto to encourage analysis of the other side’s perspectives. Feel free to provide rebuttals to whatever is posted here as well!
It’s been pretty quiet in Crypto lately, and the cryptosphere at large is likewise pretty boring with the current market. So what better way to weather the storm than to talk about why crypto sucks?
Only kidding, except I do want to get some discussion going – What are the most well-written arguments you come have come across that attempt to refute the viability of Bitcoin or Ethereum (or crypto at large)? Trying to focus in on the two big ones at the moment given they seem to be the most common on ramp to the crypto space.
If the arguments/speeches are published somewhere, please feel free to post links to them here or provide an explanation in your own words.
You may be wondering why we would discuss the elements of crypto which are prodded for weakness, and the simple answer is that it is wise to try to poke holes in the things we so confidently believe in every now and again. Theses and supporting arguments change over time, so we gotta check ourselves. Speaking as a BTC die-hard, I can say that I had numerous doubts about the project for years before I finally dove into the arguments which support the project. Said arguments convinced me to immediately invest just over $10,000 a couple years ago, so it’s important to give ourselves a reality check every now and again.
My personal feeling is that btc can never become a financial tool like govt backed fiat because the govt won’t let it. U dont fuck with govt money. They will regulate it to death. Gramps from Omaha had a good take I think, “If you said … for a 1% interest in all the farmland in the United States, pay our group $25 billion, I’ll write you a check this afternoon,” Buffett said. “[For] $25 billion I now own 1% of the farmland. [If] you offer me 1% of all the apartment houses in the country and you want another $25 billion, I’ll write you a check, it’s very simple. Now if you told me you own all of the bitcoin in the world and you offered it to me for $25 I wouldn’t take it because what would I do with it? I’d have to sell it back to you one way or another. It isn’t going to do anything. The apartments are going to produce rent and the farms are going to produce food.”
Your post inspired me to do a brain-dump. This is a topic I follow closely because I find the topic interesting, but also because of the last few years at work, I’ve tried to make crypto and blockchain solutions work within various emerging market contexts, partnering with everything from startups to big banks. I’d consider myself as a crypto-realist - I’ll believe it when I see it, and not the other way round.
A random of assortment of thoughts are below. Not all of them apply to all crypto/chain/web3 instance, but I think they are general enough to apply to the vast, vast majority of the 20,000+ coins that currently exist.
Volatility is a turn-off. Imagine bargaining to buy a dozen eggs for $3. You take your wallet out, and it now costs $4. You give it to the cashier, and they return you $2 because it now costs $2. Madness.
Being both an asset and a currency doesn’t work well together. Because coins generally have value, they are hoarded. Which gets in the way of it working well as a currency, which needs to circulate. The Brits found this out when people literally melted coins for the copper in them.
Crypto has a major UX problem. You need a blackbelt in nerd-style kung-fu to navigate the crypto world proficiently. Even using exchanges has a steep learning curve.
For mass adoption, crypto needs to interact closely with fiat, and emulate its utility closely. Thus becoming exactly what it seeks to replace.
Crypto is not egalitarian - the inequalities in the crypto world are as stark, if not starker than the real world. The difference is those who “have” are often not the have-nots in the real world, and that somehow makes it seem ok. This is similar to the real world where the corporations are given a free pass because everyone thinks they have a chance to be a multi-millionaire. (They don’t.)
Crypto is not utopian. There is usually no recourse when bad things happen. The default assumption is unless one is paranoid all the time, bad things will happen. The rule of law is key to the prosperous society we have today. Crypto unwinds this. And there sure as heck ain’t any insurance.
We have to put our faith and trust in a handful of people who run the Foundations/DAOs and a handful of coders who put the plumbing together. The recent deluge of disaster brought on by failures by both custodians and developers make it clear that perhaps the top 0.1% of coins can ever be trusted. Because they are incompetent, or malevolent, or both.
“Smart contracts” work when everything is in the digital domain, and is tied to the code in an enforceable way. This is not the case for, say, a house. The digital copy of the deed on a blockchain is not the deed.
Similarly, NFTs are not as non-fungible as people think they are. It’s just a private key. If you can transfer the private key, you can scalp tickets all you want.
I have not seen a sustainable business case for any crypto-based solution. One of the ones that comes closest is Helium, and it’s still woefully short.
The only crypto-based products that have scaled appreciably have strongly relied on there being a greater fool - someone to sell off what was bought.
Crypto setups usually fail when some kind of handshake has to happen with flesh or brick-and-mortar. As an example, one of the strongest use cases for crypto is transferring money across borders cheaply. Works for tech savvy people who live in their smartphones. Doesn’t work so well for refugees who are running with just the clothes on their back.
Anonymity is a myth for most crypto setups - with sufficient effort, it turns out to be reasonably easy to track down who is doing what. People have gotten robbed of their private keys after getting doxxed. Or worse.
Just because crypto folks say it is unregulated doesn’t mean it will always remain unregulated. Crypto is just about coming up to systemic risk levels, and will see regulation come in heavy, irrespective of what enthusiasts may feel. It’s like the folks who declare sovereign states for themselves. When more than a handful engage in such fantasies, the po-po shows up.
Worse, central banks now realize how powerful digital currencies can be, and are going for CBDCs. CBDCs have the worst of both worlds - complete digital control of your wallet by the government, with no anonymity.
At the end of the day, every single solution I ever looked at could be done with existing, centralized technology built on existing software stacks much better for all real world use cases.
Bar one.
That is when you need to do transact anonymously with someone you do not trust. A la Silk Road style. For that, crypto is the best tool for the job.
Damn ni, I want to be as smart as you when I grow up. But yes, when I see crypto actually used in the real world then I will believe it. Until then, we are just hoping to sell it to the next sucka for a higher price
I can’t see someone walking into a Bottega a buy a can of Coke or a bottle of water in crypto. The time of the transaction along with the price is a big no. Fiat you pay $1 and walk out in 5 seconds. also you have to consider those folks who can barely use a smart phone, have an email etc. Maybe in 100 years and still don’t see it as a cash replacement.
I don’t feel we should be focused on crypto utility with regards to common goods yet. Especially with gas fees exceeding smaller items. I’m rather bullish short term because of country-wide adoption. That said I’m expecting high adoption of ETH as its switched to PoS by governments leaning into crypto with the motive of putting on a “green” political front.
For the record, I’m like 80% XRP, 10% VET, and 10% ETH. I only believe XRP to be the main currency with long term, real world use. Once the SEC case is thrown out the window we should get the clarity we need for the green light to kick on. Also, look at Asia. They have mass adopted cryptocurrencies. The US is the one who is lightyears behind. Even if crypto was regulated here to the ground, it will still hold value in some parts of the world. Also, relatively old screenshot but still puts things into perspective when comparing XRP to the 2 giants.
Edit: My arguments against BTC/ ETH not being used as a day-to-day transactional thing are outlined in the screenshot above. Fees are too high and transaction times are too long. Bitcoin was the first but I don’t think it’s the best.
Hmm, I’m not seeing why the transaction fee listed for BTC is a static $40. This is pretty disingenuous to the fees you can see. Time is about right if you’re just moving things around, though. Personally I have transferred large quantities of BTC for less than a dollar.
Additionally, have you looked at Lightning Network for BTC? This is for @cryptowhale101 too. Lightning transactions process faster and cheaper than any credit card out there (in terms of vendor fees); the transfer doesn’t even need to ‘settle’ before it is physically in your account. Once that transaction goes through, it’s done and the BTC is there. I’d like to see credit card companies achieve that, because the reality is that as much as people cannot see BTC being used as a currency, it already does a hell of a lot better than the current infrastructure surrounding fiat transactions. The largest concern with Lightning I’ve seen is transactions per second, but that hard cap is constantly being improved.
Obviously there is the lack of regulation and the inherent volatility As @The_Ni mentioned, but what detractors need to understand is that this project is still in its infancy, And now we’ve got the most massive investing firms in the world looking at ways to grant their investors exposure? Yeah, BTC ain’t going anywhere now, it’s just a matter of the continued development of layer 3 solutions to make it more transactable. Once regulators step in with realistic controls, investing firms bring in the equity, and retail brings the demand, the price will not be nearly as volatile in either direction. Of course this beautiful fantasy is many years into the future… but then what’s stopping it from being used as a currency?
