So - what about crypto currencies?

[Raphael]

What do you think is going to happen to cryptocurriencies, and how do you think we should react to them?

A lot of people have criticized crypto on very solid grounds, pointing out all kinds of social, economic, and environmental damage it is doing. And I generally agree with those criticisms.

But I have the impression that some people's dislike of crypto has led them into wishful thinking about its supposed certain doom. As if the fact that something is bad or flawed would somehow guarantee that it will disappear. Of course, if that would be true, we would live in a very different world.

For instance, people like to point out that a lot of crypto currencies have lost a lot of value since their highest points. But a single Bitcoin is still worth tens of thousands of dollars.

Some people like to snark that crypto is "made-up money". That's true, of course, but, well, everything used as a currency is.

And, people like to point out that crypto is mostly used for shady or outright criminal purposes these days, like paying ransomware extortionists. That's true, too - but all too often, the people who point that out don't seem to understand that, for a method of payment, being the near-universally accepted unofficial currency of the global criminal underworld is actually a pretty strong position to be in.

So if, like me, you think that crypto is bad and harmful, but that its badness and harmfulness is not some kind of guarantee that it will disappear on its own - what do you do?

[Man in Space]

I work in AML (financial compliance).

Crypto is, despite everything, actually possessed of some legitimacy. NFTs are, however, bullshit.

Crypto, at least the juggernauts, aren’t going anywhere anytime soon. NFTs will shamble along like zombies because people are naive, opportunistic, smart, or some combination thereof.

[KathTheDragon]

What do you think is going to happen to cryptocurriencies

They will, of course, never go away, but they'll probably become a more niche investment. If regulators catch up, though, I have no idea what might happen. It would depend a lot on how they get regulated.

and how do you think we should react to them?

Much as we've always done. Explain to fence-sitters why they're bad and why you will lose money if you invest in them.

[zompist]

Crypto is, despite everything, actually possessed of some legitimacy. NFTs are, however, bullshit.

I assume this means "actual bankers will not look at you funny if you have some money in ETH"? Rather than that some actual use case has been found for blockchain, that is, for absurdly complicated, non-scaleable, electricity-munching databases.

What seems clear is that there is a market for a near-permanent Ponzi scheme. A subset of people like super-volatile investments that mostly go up, and even more so an array of choices where some of them might go up a lot. You don't need the world to adopt crypto, you just need more people most years, not too hard to achieve with a growing population. It kind of makes me miss the robber barons, who despite their cartoon villainy made actual things like steel.

The long term problem for crypto is that it's environmentally unsustainable. And as Paul Krugman likes to point out, if something can't go on forever, it will stop. People don't care about ecosphere collapse yet, so there is still money to be made and people will chase it. But crypto is going to be an unaffordable luxury in an oil-less, energy-hungry, global-warmed world.

[Travis B.]

To me cryptocurrency is simply a scam, nothing more, nothing less, and a convenient means for criminal activities to be funded on the side. It really has no legitimate purpose, and those big-L ~LiBeRtArIaN~ types who like to go on about how "without crypto teh GoVeRnMeNt will take my money!" of course really like its capacity for tax evasion but won't admit it.

[Ryusenshi]

Some people with too much money on their hands want to use their money to speculate. If they do so with things real people may use, like real estate, it can have bad consequences, like making housing unaffordable to normal people. I'd rather let them speculate on something nonexistent like NFTs.

The environmental impact is a concern, though.

[Ares Land]

I work in IT so I regularly get The Crypto Lecture from eager bright-eyed colleagues once in a while.

I actually first heard about it sometime in 2009! Back then it was marketed as an actual currency that we'd all use daily after the impeding collapse of government and financial system. I thought that was a lot of nonsense, which was correct, but I never guessed the applications as an investment medium slash Ponzi scheme. So I guess I'm just not cut out to be a genius millionaire investor?
Back then I also thought you had to invest in stuff that is actually useful. I was a very naive young man.

So if, like me, you think that crypto is bad and harmful, but that its badness and harmfulness is not some kind of guarantee that it will disappear on its own - what do you do?

The sensible thing of course would be to make it illegal. That's not going to happen. I'm otherwise not terribly concerned about them. As societal ills go, I think crypto is about on par with online poker games.

[Raphael]

Rather than that some actual use case has been found for blockchain, that is, for absurdly complicated, non-scaleable, electricity-munching databases.

What seems clear is that there is a market for a near-permanent Ponzi scheme. A subset of people like super-volatile investments that mostly go up, and even more so an array of choices where some of them might go up a lot. You don't need the world to adopt crypto, you just need more people most years, not too hard to achieve with a growing population.

To me cryptocurrency is simply a scam, nothing more, nothing less, and a convenient means for criminal activities to be funded on the side. It really has no legitimate purpose,

I think I kind of already responded to both of these points in my opening post:

And, people like to point out that crypto is mostly used for shady or outright criminal purposes these days, like paying ransomware extortionists. That's true, too - but all too often, the people who point that out don't seem to understand that, for a method of payment, being the near-universally accepted unofficial currency of the global criminal underworld is actually a pretty strong position to be in.

So if, like me, you think that crypto is bad and harmful, but that its badness and harmfulness is not some kind of guarantee that it will disappear on its own - what do you do?

The sensible thing of course would be to make it illegal. That's not going to happen.

Given that it's already to a large extent used by people who are already doing other illegal things, I'm not sure that that would solve anything.

[Ares Land]

Given that it's already to a large extent used by people who are already doing other illegal things, I'm not sure that that would solve anything.

I'm not sure your average cryptobro is doing anything illegal with it; and besides, adding extra barriers to illegal can curtain them somewhat.

[zompist]

Rather than that some actual use case has been found for blockchain, that is, for absurdly complicated, non-scaleable, electricity-munching databases.

What seems clear is that there is a market for a near-permanent Ponzi scheme. A subset of people like super-volatile investments that mostly go up, and even more so an array of choices where some of them might go up a lot. You don't need the world to adopt crypto, you just need more people most years, not too hard to achieve with a growing population.

I think I kind of already responded to both of these points in my opening post:

And, people like to point out that crypto is mostly used for shady or outright criminal purposes these days, like paying ransomware extortionists. That's true, too - but all too often, the people who point that out don't seem to understand that, for a method of payment, being the near-universally accepted unofficial currency of the global criminal underworld is actually a pretty strong position to be in.

I don't see how that's a response to what I said. I didn't say volatile investments were criminal; indeed, my point was that they are respectable among people who like to deal with a lot of money. I expect most people who invest in crypto are embarrassed by the criminals and would be happy if they weren't involved.

(Also, I expect you're wrong. Criminals are still fond of cash. And the world has about $8 trillion in cash, as opposed to $1.5 trillion in crypto. Crypto is good for ransomware, but less useful for in-person transfers. And really, I think a large-scale drug dealer would be preposterously naive to make a deal in crypto. Cash is visible, easily checked, doesn't leave an audit trail, and the mutual handover is easily verified.)

[jcb]

(Also, I expect you're wrong. Criminals are still fond of cash. And the world has about $8 trillion in cash, as opposed to $1.5 trillion in crypto. Crypto is good for ransomware, but less useful for in-person transfers. And really, I think a large-scale drug dealer would be preposterously naive to make a deal in crypto. Cash is visible, easily checked, doesn't leave an audit trail, and the mutual handover is easily verified.)

Indeed, stealing coins and tokens in crypto is the easy part for the hacker. (That is where all the money, hype, and marks are, after all.) The hard part is cashing out into a currency that people actually use to buy and sell things.

Case in point 1: A hacker cashes out in Magic: The Gathering cards

In April 2021, an attacker stole $50 million from the defi exchange Uranium Finance. Blockchain investigator zachxbt now says that he believes this attacker has been able to cash out his ill-gotten funds... in an unusual way.

After tracing the attacker's attempts to launder the money through Tornado Cash and then obfuscate that it had come from the mixing service (something that raises flags at some exchanges), zachxbt observed the funds go to a broker of Magic: The Gathering based in the United States. Altogether, the hacker appeared to be spending millions on starter decks, alpha sets, and sealed boxes — often overpaying by 5-10%. These items routinely sell for hundreds or thousands of dollars.

The thief is probably a creative money launderer rather than an massive MTG fan, and is probably reselling the cards to further obscure the source of the money. Then again, MTG is more than a little addictive.

Case in point 2: A hacker named Heather Morgan ("Razzlekhan", aka "The Crocodile of Wall Street" aka "Genghis Khan, but with more pizzazz") cashed out in Walmart gift cards (but still got caught):

"Police were able to link the Walmart gift cards back to some of the proceeds of the Bitfinex hack, which then opened up the further investigation," said Jonathan Levin, founder of cryptocurrency investigators Chainalysis which was involved in the investigation.

"Buying gift cards and moving between different exchanges and different cryptocurrency never actually created this sort of break in provenance that the couple intended," he said.

How many gift cards does it take to buy a lambo?

[hwhatting]

The Libertarian / Techbro hype on how crypto will get you around governments and fiat money is just that, hype. As long as you need a physical data center to create your cryptocurrency, government just can send a SWAT team and close it down. As usual, the techbros don't understand how much of what they build is dependent on the societal platform that a regulated market economy and the rule of law provide, including the spaces left unregulated.
Like with all things, crypto and blockchain are going from an initial wild west to a more regulated environmant. The EU is regulating blockchain and crypto-markets; this MICA regulation is seen by serious finance professionals as the EU even being a step ahead of the American regulators, where the SEC just mostly has started throwing the book at crypto market players without giving much guidance what kind of market it wants to have in the end.
With that regulation, serious players will enter the market and start building applications that actually will be useful. How important that will become, remains to be seen. At least, crypto will become one way to invest speculatively like any other; BlackRock has just launched a Bitcoin-based ETF.

[Torco]

I have an idea for a data structure, hear me out.
A linked list where every node contains a hash of all the data in the nodes behind it, and every time you want to add a new node, you need about 200.000 other computers to say ok and consume the power equivalent of a small nation

I'm not sure there are many non-shady use cases for crypto, and the set of those that exist are going to get smaller and smaller. My country's public bank recently implemented a functionality where you can just send money to venezuela, peru, etcetera. just like that, push a button, boom, money's in your account over in haiti. to-the-mooners say theres cases, but I don't buy em: giving people access to the banking system? applepay, googlepay, etcetera is much better positioned to do that, as are traditional banks and various fintechs all of which are much easier to use than crypto. Plus governments are well on their way to enact regulations on it. I think Raphael is right, though, I don't think it's ever going away: if enough people buy into a pyramid scheme it eventually becomes self-sustaining, especially if it's not a pure pyramid (herbalife sells perfectly edible shakes, avon does give you skin cream if you pay them, etcetera).

What to do about it? I think mostly nothing. I've lived all my life having almost zero intervention with crypto, and anticipate this won't change: I once considered buying it when it was at like seven for a dollar, I regretted not doing so many years later when i realized it was worth a fuckton, and from time to time it is a topic of conversation. I figure the position is the same as vis a vis, say, herbalife (or scientology): don't think about it too much and explain to anyone who asks that it's kind of bad.

[WeepingElf]

I'm not sure there are many non-shady use cases for crypto, and the set of those that exist are going to get smaller and smaller.

QFT. Are there any legitimate uses? To me, it seems as if bitcoin & co. are "money" with which you can buy illicit drugs, firearms and the like, or pay ransom, but you can't pay the rent in it, nor will your local grocery store accept it. Eventually, people will realize that crypto is a ticket to somewhere they just don't want to go anyway, so it will plummet.

[alice]

QFT. Are there any legitimate uses? To me, it seems as if bitcoin & co. are "money" with which you can buy illicit drugs, firearms and the like, or pay ransom

That's the entire point: allowing people the freedom to trade in things they're not supposed to because The Government Won't Let Them.

[Travis B.]

Bitcoin et al are also about keeping teh Guvermint from Takin' mah Monay (or in other words, tax evasion).

[Raphael]

But does it really matter whether something has any legitimate uses, if it has enough illegitimate ones?

[Torco]

Absolutely! steel has many nefarious uses, swords and tanks, but since it's so useful for other things, we allow it and it's good that it's widespread.

by which i mean like... nevermind that it helps with buying child slaves or whatever: if it was really useful, things (my position anyway) would be different!

[Raphael]

Oh, I'm not saying that crypto has good uses. My point is more like, if something has enough bad uses, the fact that it doesn't have any good uses by no means guarantees that it'll go away.

[linguistcat]

There was actually a pizza place for a long time in the closest college town that accepted payment in bitcoin. But they were also heavily marketing to college aged gamers and other folks who might actually use bitcoin. They closed but I can't speak to bitcoin playing a role in that or not.